- Currencies Markets Commentary -

June 10, 2010 (FinancialWire) (Investrend Information Syndicate) (Via Brewer Investment Group) (Overnight, June 9, 2010, Report) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — Yesterday the PowerShares DB US Dollar Index Bullish Fund (NYSE: UUP) closed down 0.39% per share on volume of 3.2 million shares, while the PowerShares DB US Dollar Index Bearish Fund (NYSE: UDN) closed up 0.41% per share on volume of 375,900 shares. FinancialWire(tm) contributor, Brewer Investment Group, provides us with some related perspective and insight regarding the outlook for the currency markets:

The Dollar rose against the Euro late in the trading session after the release of the Fed’s Beige Book. The business survey showed subdued U.S. economic growth which led speculators to believe that the Fed won’t be raising interest rates soon despite what investors had earlier interpreted from Chairman Bernanke’s comments.

Some traders also attributed the break to position evening ahead of the European Central Bank’s policy meeting on Thursday. Although the ECB is expected to leave interest rates unchanged, investors are worried about its statement and the post-meeting comments from ECB President Trichet. The statement is expected to contain bearish talk about the near-term growth of the Euro Zone economy. Trichet is expected, however, to sound more upbeat as he tries to unite the Euro Zone nations.

From a technical perspective, the inability to hold above the 1.20 psychological support encouraged weak longs to throw in the towel, triggering a hard break into the close.

Stronger demand for higher risk assets and slight optimism about Euro Zone finances helped to boost the EUR USD during most of the trading session. Early Wednesday morning, the Euro reached a high of 1.2072 before comments from Fed Chairman Bernanke and the results of the Fed Beige book strengthened the Dollar.

Higher equity and crude oil markets helped drive up demand for riskier assets. This strength spilled over to the Euro. In addition, traders were a little more optimistic about the survivability of the Euro after the European Union finalized its rescue plan. Although sovereign debt issues remain the major concern, short traders felt it was necessary to pare positions on this news.

Technically the Euro is still in a downtrend, but the charts indicate that there is room to the upside should the current weakness prove to be only a retracement and test of the bottom at 1.1876. Recently hedge funds and large speculators have been shying away from selling weakness and have been more comfortable with selling retracements. If the bottom at 1.1876 is defended on this current break, then look for the start of a rally back to the nearest retracement zone. Watch for renewed selling pressure once the Euro completes its retracement to 1.2164 to 1.2233.

Source: Courtesy of Brewer Investment Group, LLC; For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Communications via resources@investrend.com with “Brewer” in the subject line.

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Brewer Investment Group, LLC, advises that Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer FX, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Communications via resources@investrend.com with “Brewer” in the subject line.

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