British Pound (BPU8):
The BP opened higher at 1.9569, slid to a morning Lo of 1.9558 and rose to a mid-day Hi of 1.9615 as higher than anticipated Retail Sales saw traders selling EC to take advantage of the 5.0% v 4.0% yield gap. With inflationary concerns increasing, the proposed rate cut should be postponed by the MPC, possibly through year end. Prices drifted lower towards the close and ended the session at 1.9606, up 141 tics. The s/t trend remains 'positive' w/ firm momentum indicators. A higher open should find Resistance at 1.9663 and 1.9720, while an open below 1.9558 may find Support at 1.9501 and 1.9396.
Dolllar Index (DXU8):
The DX opened higher at 74.00 as traders took advantage of a surge in the BP to sell EC by 'crossing' the 'pairs' with the DX. There is lower liquidity when FOREX traders try to 'cross' the BP/EC, so using the DX to acommodate higher liquidity help send the DX off the morning Lo of 73.79 back to a morning Hi of 74.00. Prices were helped by lower oil prices and the likelyhood of a rate increase by the Oct. 28-29 FOMC meeting. The DX drifted to a close of 73.87, up 3 tics. The s/t trend remains 'negative' w/ neutral momentum indicators. The close above the 50% Fib Ret. level will be used as a Target Support. A higher open should find Resistance at 74.05 and 74.23, while an open below 73.82 may find Support at 73.64 and 73.41.
Canadian Dollar (CDU8):
The CD opened higher at .9849 and rose to a morning Hi of .9882, on higher than expected CPI data. As oil prices sold off, the CD slid to a morning Lo of .9844 and bounced into the afternoon session. Traders were selling the rallies throughout the afternoon, before ending the session at .9845, up 36 tics. The s/t trend remains 'positive' w/ neutral momentum indicators. A higher open should find Resistance at .9884 and .9923, while an open below .9843 may find Support at .9804 and .9763.
Euro Currency (ECU8):
The EC opened lower at 1.5419 against the stronger BP and DX. The rally in the BP combined with the SNB keeping rates 'unchanged' saw traders taking profit/risk off the table. The SNB has followed the footprint of the ECB, which traders took as a sign that the 'hawkish' rhetoric is just that, 'jawboning'. Prices slid to a morning Lo of 1.5403 and climbed back to a morning Hi of 1.5447, before drifting lower towards the close to end the session at 1.5435, down 31 tics. The s/t trend remains 'positive' w/ neutral momentum indicators. We will see if Trichet or the ECB 'Hawk', Alex Weber is sent to the podium to prime the pump. A lower open may find Support at 1.5377 and 1.5326, while an open above 1.5448 should find Resistance at 1.5499 and 1.5570.
