The September Euro fell in response as comments from Trichet indicated that it may be one and done even though inflation readings are twice as high as the ECB would like. We have some clients positioned short futures and sold 154 puts against their shorts. The reversal pattern on the daily charts indicates that we may get a quick move down to at least 1.5500 from over 1.5850 just 3 sessions ago. We will most likely add shorts to this position and be selling rallies for clients this week on signs of increasing Euro weakness or dollar strengths. Last week we told you to put the September 150 put on your radar and it may be a viable play; not to hold till expiration, but with a delta of 17% on a violent 300 plus point move you should be able to pick up $500 on $750 premium without the margin and unlimited risk of futures.

The September British pound was down 1.35 cents on the week back below the 200 day moving average. Assuming the recent high holds, we could get a 50% Fibonacci retracement taking prices back to 1.9545.

As with the Euro we advised a put option play here as well. The September 195 put has picked up about $100 since we told you to put it on your radar. Try to buy it this week for 170 points ($1062.50) and look to liquidate for 240 points ($1500) at a later date. For futures, sell rallies looking for prices to track lower. Thursday the Bank of England is expected to keep rates steady at 5.0%.

September Australian dollar made a new contract high, but was down slightly on the week loosing 5 ticks. We want to be long but the market is starting to look heavy, after a 3 cent advance in just about three weeks the Aussie looks like it may take a rest, so be patient with new entries. On a pullback .9500 should serve as first support with more significant support at the 20 day moving average at .9420.

As we said last week we were looking for shorting opportunities, perhaps from higher levels. On the week the September Swissie lost 80 ticks ending the week near the lows. From here one could be short with stops above last week’s highs just above .9900. We are looking for prices to make their way back to the bottom of the recent trading range around .9550. Assuming a fill at the current price, as of this writing you are looking at a 1:1.5 risk/reward ratio which is not that good, so it is up to you if you take the trade. We think the better plays are in the Pound & Euro to be short.

The Canadian dollar has tended to rally throughout the first Canadian fiscal quarter (April-June). Once into July, however, it has regularly rolled over and declined into August. We recognize that past performance is not indicative of future results, but the charts aren’t telling any real story so we will go with history and expect weakness in the Loonie. Look to sell rallies that are contained by the recent highs around .9940 ultimately looking for a trade back to .9650.

We advised clients to go to cash on their yen positions. When it doubt move to cash. It is much better to be on the sidelines wishing you were in the market as opposed to, in the market wishing you were on the sidelines. Prices should find resistance at .9900; the 40 day moving average and support just under .9300, but it could go either way so we have no trade ideas for now.

Last week the dollar index traded slightly higher helped by comments from the ECB, but on a holiday shortened week and light volume we’re not reading into this too much. We will look to see how the dollar reacts this week as traders get back from the holiday to see if we get some follow thru. Thursday we closed on the pivot point with support coming in at 72.80 and resistance at 73.30. Continue to monitor movement in the dollar, not so much to trade, but to see how other markets react to its movement. As many commodities are priced in dollars, if you see a significant move either way look for commodities to move in the contrary direction.

Grains

Look for action this week to be influenced by Informa and the USDA reporting on demand and yield.

Corn: Weekly export sales showed 325 t.m.t. of corn was sold last week. With the USDA’s most recent acreage report behind us, traders will wait for the next update in August hoping for more detail. The planted acres estimate of 87.3 m.a. up from March 31 is sure to change as we think a reduction will happen as we digest late plantings, reseedings, and flood damage. For now it is all about weather and its impact on the yields. Price moves are becoming more exaggerated as there is a lot more money trading in this area. December last week was down limit on Monday and up limit on Wednesday so expect increased volatility. Last week alone we had a trading range of 57’2 cents or $2862.50/contract. The 20 day moving average has been the line in the sand to date, but if it were to give way look for a trade down to 7.35 and potentially 7.25. We still favor the long side, but the charts are ugly so if you are going to play from the long side be prepared to sell different months for coverage or use options to limit your exposure. After this correction runs its course we still do expect another leg higher ultimately taking December to at least 8.50.

Beans: Weekly export sales showed 465 t.m.t. of beans were sold last week, up from a negative reading last week when China cancelled previous orders. Last weeks USDA acreage report showed 74.5 m.a. were planted. With near perfect growing weather into harvest, we look to see ending stocks near 150 m.b. Any significant drop in yield or a considerable jump in global demand and we run the risk of running out of beans next year unless prices went high enough to ration demand. The market will need to deal with this from now thru August until we get a better idea of yields. A stretch of hot and dry weather now could send November beans well over the $20. As we started off with too much rain and flooding we now need to see mild precipitation so as to prevent beans from cooking in the heat. We have advised clients to lighten up on their longs as prices look like they are due for a setback. By no means do we think the highs are in, but looking at a candlestick chart with the Doji formation on Thursday and the lack of follow through after a new record posted, we could get a mild retracement. For now prices are supported at the 9 day moving average at 15.92 on November, if that were to give way we could see a trade down to 15.50 with out any chart damage. We will be buying dips in November for clients via futures and option call spreads.