COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6,
Orleans, Massachusetts

(June 11, 1997) CURRENCIES: Most currencies have had an
exceptionally volatile week, as the dollar lost and gained ground against the mark, yen, Swiss and pound. There will be a meeting of the EU on Monday in Amsterdam. Uncertainties remain regarding the implementation of the EMU. France requested a "period of reflection" on the EMU budget pact, which helped rally the Swiss, mark and yen. The yen attracted flight to quality type of buying, especially from Asia, as many traders expect a large current account surplus against the U.S. The yen also gained from fears of trade difficulties when the G-7 meeting takes place June 20-22 in Denver. An anticipated narrowing of the interest rate differential was also cited as supporting the yen. Conservative traders should stay away from the currencies unless trading options.

RECOMMENDATION--The September Canadian Dollar broke through the 7265 level, but thus far has had little follow-through. The chart is still friendly, so traders should contemplate buying current levels with stops under 7239 or 7196. Resistance may appear near 7310-7315, 7340-7350, 7370 and 7400. Taking out 7400 is positive and implies the low is in. Objective is open. The September mark has plenty of resistance as the low 5900's is approached which may prompt profit-taking. Aggressive traders could contemplate buying the September mark in the 5860-5850 area with stops under 5770 or of 25-50 points. It still isn't clear as to whether or not this rally can hold, so very aggressive traders could consider selling the September mark on rallies to the low 5900's or so with stops of 50 points or above 6050. An upside penetration of 6050 is positive, and suggests that the mark has bottomed. Conservative traders or long-term bulls might buy September or December mark calls at current levels. Prices are still cheap, and could represent quite a buying opportunity.

The September yen has been unable to take out resistance near 9042- 9050 on a close basis, which brought in some profit-taking. Bulls might look at buying the 8860 area on pullbacks of 50-100 points with stops of 50-100 points or under 8690. Don't get complacent. Use stops. The downside could be considerable if support is taken out. The yen is not for the faint of heart.

The September Swiss looks good in the short term, and it may be that after last week's reversal from the lows the market is primed to move higher. However, the Swiss has had trouble holding its gains on a close basis, so caution is advised. Resistance is substantial near 7080-7100, 7120, and 7175 or so. Support may appear near 7030-7020, and near 6990 or so, so aggressive traders might contemplate a buy in that area with 50-100 point stops or under 6985 or 6900.

M. Steven Morgan

Added to the WWW 06-14-97
Last updated on 06-14-97

Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com

wmeubank@ocp.kcmo.com