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To: Joan Osland Graffius who wrote (80284)	8/30/2003 4:40:48 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 209892

YEs and who will believe them the USD/JPY was solid like a rock for the whole month - no fluctuation as the UDX gained over 5.5% Bellow Deutsche Bank commentary of last Friday EUR USD (1.0875) After a week of exclusively sideways trading, short-term players now feel comfortable trading the euro from both sides. At the start of the week, the single-currency was ‘too low to sell’. They, therefore, concentrated on bottom-fishing. Now, any price above $1.09 is perceived as relatively high and is attracting just as many short-sellers. The entire activity is, in any case, solely in the hands of day-traders. Medium-term traders have probably done very little this week. Readers of the EUR-Sentiment Survey* will know that, despite having sold out a good proportion of their euro holdings over the last two weeks, medium-term operators are still net long. If the reason for selling was evidence of an economic recovery in the US, why is this not a good reason to sell out the remainder? After all, there has been no let up in the stream of better-thanexpected data. The answer is that this was not the reason. They sold the euros previously accumulated in early August because the positions moved from profit to loss. Older long engagements, however, are already in the red; they no longer cause as much pain as a new loss. Although they may not be motivated to sell at current levels, they will be in case of a bounce. This overhang of long positions therefore represents a risk for the euro and makes a stabilisation unlikely. Whilst the single-currency trades below 1.0945/50, we favour a continued slide to 1.0760, where the first good supports commence. Any hope of a meaningful upward correction must be shelved until 1.0990 is overtaken. USD JPY (117.05) The current targets remain 114.95 and then 112.95. Overnight, the dollar produced a move that we had anyway described as ‘unavoidable’ – it broke through the lower border of its 117.15 - 121.00 consolidation zone. We can suggest intermediate demand at 115.75, but the reality is that all the nearby supports are flimsy and unreliable. To the upside, the risk-reward limit to the bearish view stays at 118.50 for the moment. But, once 117.00 is traded, this can be comfortably tightened to 117.70. Strong resistance remains at 118.95 in any case. EUR JPY (127.35) The current objective remains at 125.80. Although it came under pressure again yesterday, dip-buyers did not give up on the euro. Today we believe that even a move to a new low (126.50/55) will still attract the adventurous. Below there, however, stop-loss selling ought to be sufficient to nudge the cross to the objective. A violation of our target level would even open the door to declines 123.05. The risk-reward limit to our bearish view remains at 128.90 and the toughest overhead resistance is sighted at 130.10 (strong). and this is Credit Agricol reserach report Majors - USD: Ending the week on a firm footing, with Chicago PMI to give support. The view that Fed Chairman Greenspan will talk down bond yields in his speech in Jackson Hole today has intensified. Undoubtedly, the 132 bp rise in yields (10 yr Treasuries) since mid June may have provoked some concern. As seen by the slide in MBA mortgage applications there has been some immediate impact, which will eventually feed through into housing demand. Nonetheless, we find it difficult to see how Greenspan will be able to talk yields lower without risking the Fed’s credibility. Data releases since the last Fed meeting on August 12 have been consistently positive, showing strengthening signs of recovery. This has been very well reflected in the strength of our US economic surprise index. Some Fed speakers have expressed little concern about rising yields, suggesting that it is consistent with better economic conditions. It is unlikely that the rise in yields will do much real damage to recovery hopes in any case. Indeed, the Chicago PMI to be released today is set to show that the prospects for the manufacturing sector have improved further. We expect a further rise in the PMI in August as indicated by the rise in the August Philly Fed survey last week (see chart of the day). We look for an above consensus reading of 57.0 from 55.9 in July. Overall, Greenspan has room to be upbeat on growth, but will have little room to be upbeat on bonds. As for the USD, strong data, positive equity and negative bond environment all bode well for further gains. JPY: Better fundamentals drive JPY higher. But where is the BoJ? Economic data from Japan continues to beat expectations with a barrage of releases overnight all pointing to stronger activity. Industrial production rose more than expected and firms’ expectations for output in the remainder of the quarter are very strong indeed. Deflation eased further — at least on the core CPI efinition that the BoJ focuses on. And the labour market saw a further improvement in July with job offers per applicant rising to a two year high. Domestic markets responded as expected with equities rallying and JGB yields reaching new cycle highs. JPY also strengthened, but in our view is now at levels where the risks are highly asymmetric. Much of the BoJ intervention in June and July was at levels just above 117.00 in USD/JPY and in broader terms, JPY is considerably stronger than the levels that have seen intervention in the last couple of months. So where is the BoJ? The MoF must surely be unhappy with JPY at these levels, in what is largely an independent JPY move. Possibly, Snow’s visit to Japan is acting as a political constraint on intervention. But with this constraint lifted next week, there is every reason to look for large scale BoJ intervention in USD/JPY and EUR/JPY. We see the balance of risks as favouring long position in both pairs over the next week.

To: Joan Osland Graffius who wrote (80284)	8/30/2003 5:08:50 PM
From: Haim R. Branisteanu	Respond to of 209892

Daily Technicals August 29, 2003 from REFCO Technical Commentary • EUR/USD Potential bear flag on daily • USD/CHF Consolidation continues • GBP/USD Rallies off fib support Short-Term Outlook Range trade continued in EUR/USD yesterday as market participants continue to digest the important technical breaks of the last few weeks. The consolidation below the 50% fib retracement of the December-May bull wave and the 200-day SMA looks to be forming a textbook bear flag with an eventual breakdown the favored scenario in the medium-term. In the short-term, risk does remain for a potential short covering rally up to the 200-day SMA resistance zone as daily oscillator studies remain clearly oversold. GBP/USD rallied yesterday off key long-term fib support (38.2% of June ’01 – June ’03 bull move) in the 1.5670 area. Oversold oscillators on the daily give scope to a further continuation of the rally but anything above the 200-day SMA would be surprising. In the longer-term our bias remains overwhelmingly negative as the key technical breaks of the LT trendline and the 200-day SMA over the past few weeks point to an eventual continuation of the downside. Little of note in USD/JPY, once again, as the pair remains trapped in a tight 100-pip range. Our bias is slightly bullish at current levels as the recent propensity for range trade favors a bounce and test of the range high. In the long –term, technicals do favor an eventual downside test, but we can only get excited about the prospects of the downside on a close below the 117.00 and 116.65 supports. A bull flag on the USD/CHF daily coupled with strong fibo support in the 1.4050 area implies an eventual resumption of the intermediate-term bull trend. In the short-term, however, daily oscillators do remain a bit overextended indicating more consolidation trade in the coming sessions until the pair works off the overbought conditions. We favor the bull scenario as long as the 1.4050 support zone holds correctly. Our upside trigger to the trend continuation scenario remains a clear break of the 8/26 high of 1.4278. RefcoFX News Research Team Kristian A. Kerr Chief Technical Strategist Francois Nembrini Senior Research Analyst www.refcofx.com sales@refcofx.com 1.212.201.7304 1.877.538.8820