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COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(August 14, 1997) CURRENCIES: Fund selling helped the dollar reassert itself and gain on most currencies. This may be only a technical correction, so whether we have a change of the long-term trend remains in question. Fund selling of currencies was noted. There was also talk that the BUBA might be considering tightening credit, but thus far that has been perceived as politically very unpopular, and Germany's economy is such that this could be talk or posturing. The yen continues to take heat in a “guilt by association” perspective, in that many traders are concerned that the currency problems in Southeast Asia could spread and perhaps drag the yen down with them. If something happens to unravel the planned EMU, the currencies could stage dramatic moves higher against the dollar. Overall, I remain bullish the dollar, but suspect that a hard break remains waiting in the wings. If you're not a diehard currency trader, perhaps you should buy a bag of popcorn and watch the players in the dollar rodeo.
RECOMMENDATION–The September Canadian Dollar continues to hold its own but not much more. For the time being, aggressive traders might buy the September. Canada in the 7190's with stops under low of 7178. Look for a move to the upper 7200's, possibly higher. Be alert for failures or reversals as the 7220's are approached. Bears should stay on the sidelines or sell a penetration of 7178 with stops over 7231. Support lies near 7187 and 7158. If 7158 is taken out, the 7120's appear achievable. An ultimate objective of the mid-6900's may be in the cards. The September mark also continues to hold support. Resistance may be encountered in the 5480's, 5567, 5619, and 5652-5660. Most traders should stay on the sidelines. If you're feeling an urge to bottom pick, consider calls, as the decline has really taken much of the premium away. If you find yourself a bull, buy the 5435-5450 level with 50-point stops or under 5350 or 5300. Be alert for failures on tests of resistance. Aggressive bears could sell rallies to the 5600-5620 area with stops of 100 points. The September Swiss like the mark, is holding support. Aggressive traders might buy the Swiss in the mid-upper 6620-6630 area with stops of 50-100 points. However, most traders should wait for the dust to settle. Look for resistance near 6740-6750, support near 6530-6540.
M. Steven Morgan
Added to the WWW 08-15-97
Last updated on 08-15-97
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