The markets are reported as of the close Thursday.

The dollar as expected was hurt by the Bundesbank action on rates as it again made new correction lows against the DMK but not the SWF. This combined with Greenspan's comments early in the week have certainly turned the dollar sentiment considerable more bearish. It is getting to levels usually seen at short-term bottoms but the current wave of selling does not appear to be over yet. The dollar was flat Thursday versus the yen but has dropped again Friday and next strong support is being tested. The yen crosses are looking more toppy.

DEUTSCHEMARK/DOLLAR: The dollar reached the 1.7330 area in early NY trading but then rebounded to close the day well above the highs. Was this a panic low? It is possible but the daily studies still show little life as a strong upside daily reversal is necessary to indicate that the dollar is sold out. The sharp rally in the DMK/SWF suggests the DMK will be stronger than the SWF over the next few months.

Summary–No current position.

SWISS FRANC/DOLLAR: The dollar's strong rally from the lows is encouraging and there are now some signs of a bottom.

DEUTSCHEMARK/YEN: Support at 68.50-80 is now being tested which suggests that a top is complete. A rebound should be sold.

The dollar attempted to stabilize Thursday but has resumed its sharp drop Friday as the support at 120.50 has been broken. The more important support at 119.50-120 is now being tested. The daily uptrend was decisively broken today and there is further support now in the 118-118.50 area. Resistance strong now in the 120.50-80 area. The daily studies like the RSI are negative and declining.

Summary–No good risk/reward entry on the short side.

STERLING/YEN: The STG/yen has violated the support at 196 which suggests that the cross is now topping out. The more important support at 194.50 is being tested. We will look for a rally to sell.

SWISS FRANC/YEN: The cross has accelerated to the downside as the 83 level was broken in the past few hours. On a short-term basis, the cross is oversold. Our selling zone was just missed. Traders go 25% short at 83.33-73, stop at 84.13.

CANADIAN DOLLAR/DOLLAR: The dollar is still trying to rally but the resistance in the 1.3740-60 area may limit the upside over the near term. Traders are 25% short at 1.3762-77, stop at 1.3777.

The STG overcame the near-term resistance at 1.6240-60 but so far has not been able to move through the 1.6300 area. Still important support in the 1.6150-6200 area. A sharply lower daily close will indicate that a top is in place. The daily studies are declining but still are positive overall.

STERLING/DEUTSCHEMARK: The cross broke below the more important support at 2.8280-8300, after the rate hike in Germany but closed well above the day's lows. The daily chart and technical studies are still weak so a further decline is likely.

STERLING/SWISS FRANC: The cross is acting much stronger as it surged above the 2.3600 level in late NY trading. A bottom is possibly in place but would wait for confirmation.

DECEMBER TREASURY BONDS: The bonds plunged in early trading to the 115 area but have now bounced back to the 116 area. A further rally should be sold. We would go 25% short at 11611-28, stop at 11713.

U.S. STOCK MARKET: The market was able to recover from the early lows which is a short-term positive. A higher daily close should set the stage for a test of more important resistance next week.

October 10, 1997Thomas E. Aspray

Consensus National Futures and Financial On Line Index | Technical Corner Index

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