Alaron Currency Comment

CHICAGO - Sep 7/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

U.S. DOLLAR INDEX (DXU6):

The DX opened higher at 85.23 and rose to a morning Hi at our secondary Resistance level of 85.30 after Unit Labor Costs and the ISM Non-Manufacturing Index were higher than expected. The DX slid to a morning Lo of 85.15, before bouncing to 85.21 as we enter the afternoon session and await the Beige Book data from the Fed. As seven of the twelve districts continued to show modest, the remaining five districts reported 'decelerating growth', which prompted traders to take profit/risk off the table, sending prices to a 'day-session' Lo of 85.03, before closing at 85.04, up 7 tics. The s/t trend remains 'positive', but momentum indicators will need help to maintain at these levels. The prospect for another 'rate increase' should deminish based on the Beige Book data, but that remains to be seen. A lower open may find Support at 84.88 and 84.72, while an open above 85.09 should find Resistance at 85.25 and 85.46.

CANADIAN DOLLAR (CDU6):

The CD opened lower at our Pivot level of .8998 as traders await the BoC rate decision. Prices slid to a morning Lo of .8990, but rallied as the BoC maintain the current s/t rate of 4.75%, stating that the economic risks were balanced and no further increases were needed in 06'. Prices rose to a morning Hi of .9057, before retracing to .9048 as we enter the afternoon session. The CD maintained the tight range around the .9050 level and ended the session at .9048, up 45 tics. The 'large range' positive move above the 9-day MA changes the s/t trend to 'positive', as momentum indicators firm looking for help from the energy/metals sector to challenge the 2-month Hi of .9070 on 9/1. A higher open should find Resistance at .9073 and .9099, while an open below .9032 may find Support at .9006 and .8965.

BRITISH POUND (BPU6):

The BP opened lower at 1.8836 and rose to a morning Hi of 1.8842, before continuing strength in the DX sent prices to a morning Lo of 1.8792. Prices rebounded to 1.8814 as we begin the closing half of trading. As the DX retreated on the Beige Book data, the BP rebounded to a close of 1.8851, down 98 tics. The s/t trend remains 'negative' and momentum indicators weak, but the 38% Fib Retracement Support of 1.8794 held, which could see further short covering ahead of Thursday's BoE rate meeting. A higher open should find Resistance at 1.8872 and 1.8893, while an open below 1.8832 may find Support at 1.8811 and 1.8771.

EURO-CURRENCY (ECU6):

The EC opened lower at our secondary Support level of 1.2800 and rose to a morning Hi of 1.2809, before following most other foreign major currencies lower as the DX rallied on economic data. Prices retraced to our Weekly initial Support level of 1.2779 and bounced to 1.2790 as we enter afternoon trading. The EC followed most other major foreign currencies higher and rose to a daily Hi at our Pivot level of 1.2825, before closing the day at 1.2824, down 4 tics. The s/t trend remains 'positive' as momentum indicators remain 'neutral' awaiting news from the BoE. A higher open should find Resistance at 1.2840 and 1.2855, while an open below 1.2809, may find Support at 1.2794 and 1.2763.

. JAPANESE YEN (JYU6):

The JY opened lower at .8585 as lack of follow-thru buying off of Tuesday's short-covering rally triggered profit-taking and lower prices. After bouncing to a morning Hi at our Weekly initial Resistance of .8599, the JY slid to a morning Lo of .8580 as we head into the afternoon session. Prices rebounded to .8594 and ended the day at .8592, down 49 tics. The 'reversal-day' continues to maintain the s/t 'positive' trend, as momentum indicators weaken on the profit-taking. As long as the 'rate' differential remains, carry-traders will weigh on prices, until the economic recovery gathers momentum. A higher open should find Resistance at .8605 and .8617, while an open below .8586 may find Support at .8574 and .8555.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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