Alaron Currency Comment

CHICAGO - Aug 15/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

U.S. DOLLAR INDEX (DXU6):

The DX opened higher at 85.50 and rose to a morning Hi of 85.53, before stronger Q2 GDP in Germany and the EZ pressured prices to a morning Lo of 85.18. Traders await key economic data Tuesday on the NY Empire Mfg. report and the PPI, which could fan the flames of Friday's Retail Sales report and increase the odds of a rate hike. Prices bounced to 85.33 as we enter the afternoon session. As traders adjusted positions ahead of Tuesday's data, the DX rose towards the close to end the session at 85.47, up 8 tics. The s/t trend remains 'positive' and firmer momentum indicators suggest higher prices. The 'inflation' indicators will determine the DX future this week. A higher open should find Resistance at 85.61 and 85.74, while an open below 85.39 may find Support at 85.26 and 85.04.

CANADIAN DOLLAR (CDU6):

The CD opened lower at our initial Support level of .8879, as lower oil/metal prices and a 'cease fire' in the mideast weigh on prices. As the DX weakened and Silver prices jumped, the CD rose to a morning HI of .8925, before sliding to .8905 as we enter the afternoon session. Prices topped-out at .8907 and retraced as the DX rebounded, sending the CD lower into a close of .8883, down 21 tics. The close below the 9-day MA changes the s/t trend to 'negative' as momentum indicators head lower. Support from the energy/metals along with a weaker DX will be needed for the CD to return to higher levels. A lower open may find Support at .8866 and .8850, while an open above .8896 should find Resistance at .8912 and .8942.

BRITISH POUND (BPU6):

The BP opened lower at 1.8857 and slid to a morning Lo of 1.8850, before a weaker DX helped prices climb to a morning Hi of 1.8948. As we begin the afternoon session, prices have retraced to 1.8913. The DX rebound helped pressure the BP lower towards the close, ending the day at 1.8885, down 22 tics. The s/t trend remains 'negative' as momentum indicators weaken, suggesting lower prices. Traders will look for help with release of Retail Sales on Thursday, hoping to substantiate further rate increases if needed. A lower open may find Support at 1.8841 and 1.8796, while an open above 1.8894 should find Resistance at 1.8939 and 1.8992.

EURO-CURRENCY (ECU6):

The EC opened lower at 1.2739, despite the higher than expected increase in Q2 GDP of +0.9%. Prices rebounded off the 1.2737 morning Lo as the DX retraced, sending the EC to a morning Hi of 1.2788, before falling to 1.2758 as we begin afternoon trading. The EC followed most major foreign currencies lower into the close of 1.2744, down 7 tics. The s/t trend remains 'negative' as weaker momentum indicators suggest lower prices on any further DX strength. The 50% Fib Retracement level of 1.2724 is within reason and could be Target Support. A lower open may find Support at 1.2725 and 1.2705, while an open above 1.2756 should find Resistance at 1.2776 and 1.2807.

. JAPANESE YEN (JYU6):

The JY opened lower at .8611, hit a morning Lo of .8610, then rebounded along with most other major foreign currencies as the DX weakened. Prices hit a morning Hi of .8642, before falling to .8624 as we approach the afternoon start. The JY retraced to a daily Lo of .8605, before bouncing to a close of .8607, down 30 tics. A 'negative' s/t trend and weaker momentum indicators suggest a test of the .8580 to .8555 Target Support area. A lower open may find Support at .8594 and .8581, while an open above .8618 should find Resistance at .8631 and .8655.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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