Alaron Currency Comment

CHICAGO - Aug 1/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

The following information and technical indicators are designed to assist you in your decision making process for investing in the Currency Market. I strongly suggest each investor have a plan to follow for each trade that will determine: entry level, profit objective and risk tolerance, to help alleviate the emotional swings of trading. If you are looking for assistance in developing a strategy, give me a call at 800.462.4691.

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The DX opened lower at 85.03 as traders continue to take profit/risk off the table as pressure from the EC and JY, along with doubts of another rate increase have sellers in control in early trading. Prices slid to our initial Support level of 84.90 just ahead of the NY open, before bouncing to a morning Hi of 85.20 on a better than expected Chicago PMI report. As we enter the afternoon session the DX is trading at 85.08 awaiting further economic data later in the week that could sway the FOMC decision on Aug. 8. The DX rose to an afternoon Hi of 85.15 before drifting to a close of 85.09, down 10 tics. As traders look for further evidence of a pause or another increase, more will be weighing on the Non-Farm Payroll report on Friday. The s/t trend remains 'negative' as momentum indicators continue to weaken, suggesting a test of the Target Support at 84.42 on 7/7.

CANADIAN DOLLAR (CDU6):

The CD opened higher at our secondary Resistance level of .8912 and rose to a morning Hi of .8916, before a weaker than expected GDP report sent prices tumbling to our Pivot level of .8850 as we begin the afternoon session. Prices bottomed at .8847 and continued to hover at the Pivot level through to a close of .8849, up 1 tic. The s/t trend remains 'positive' as momentum indicators remain 'neutral' and supported by higher energy prices. A lower open may find Support at .8825 and .8802, while an open above .8871 should find Resistance at .8894 and .8940.

BRITISH POUND (BPU6):

The BP opened higher at 1.8681 and rose to our initial Resistance level of 1.8710 as traders rotate out of DX positions and into most other major foreign currencies. As we approach the afternoon session prices are at 1.8703. The BP topped out the afternoon session at 1.8706 and drifted to a close of 1.8700, up 40 tics. The s/t trend remains 'positive', while momentum indicators continue higher, suggesting higher prices. With the BoE discounting the increase of Mortgage approvals and suggesting no rate increases until Q4, longs should tighten 'stops' or purchase a 'put' ahead of the Aug.3rd MPC meeting. A higher open should find Resistance at 1.8720 and 1.8740, while an open below 1.8690 may find Support at 1.8670 and 1.8640.

EURO-CURRENCY (ECU6):

The EC opened higher at 1.2809 as stronger EZ economic confidence data and higher German Retail Sales sent prices to a morning Hi of 1.2825, before retracing to a morning Lo of 1.2784 on the better than expected Chicago PMI. Prices bounced to 1.2804 as we begin the afternoon session. The EC managed to move to an afternoon Hi of 1.2815 and ended the session at `1.2813, up 21 tics. The s/t trend remains 'positive' with improving momentum indicators, suggesting a move to our Target Resistance level of 1.2920 on 7/7. Will traders discount a 25bp increase on Aug.3rd or look for further tightening? Longs may concider tightening 'stops' and purchase a 'put' to reduce exposure. A higher open should find Resistance at 1.2831 and 1.2848, while an open below 1.2807 may find Support at 1.2790 and 1.2766.

. JAPANESE YEN (JYU6):

The JY opened higher at our initial Resistance level of .8814 as an increase in the Chinese Yuan, Japan's strongest importer, along with an increase in Japan's Industrial Output sent prices to a mornng Hi of .8818, before retracing to a morning Lo of .8788 and bouncing to .8798 at the afternoon open. Prices slid to a daily Lo of .8775 before bouncing to a close of .8784, up 6 tics. The s/t trend remains 'positive' as the JY continues to post another higher (H&L) and momentum indicators strengthen, suggesting a move to the the Target Resistance at .8876 on 7/10. Higher oil prices could weigh on the economic recovery effort at a time when rate increases could attract funds from Japan. Longs should tighten 'stops' or purchase a 'put' to reduce exposure ahead of the Aug. 3rd rate meetings in the U.K. and EZ. A lower open may find Support at .8767 and .8749, while an open above .8792 should find Resistance at .8810 and .8835.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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