Alaron Currency Comment

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

U.S. DOLLAR INDEX (DXU6):

The DX opened lower at 85.60 as pressure from a stronger BP and EC weighed on prices ahead of the Retail Sales data and Jobless claims. Better than expected Retails Sales of +0.2% vs exp. –0.2% and a drop of 5000 vs exp gain of 5000 Jobless Claims helped the DX climb to a morning Hi at our Pivot level of 85.80. As buyers backed-off, the DX retraced to a morning Lo of 85.45, before rebounding to our secondary Support level of 85.55 as we enter the afternoon session. Prices traded in a thin range through to a close of 85.56, down 17 tics. The s/t trend remains 'positive', but suspect, as weaker momentum indicators suggest lower prices. As prospects for higher rates in the BP and EC continue to escalate, pressure should weigh on the DX. Longs should tighten 'stops' or purchase a 'put' to reduce exposure ahead of the G-7 statement. A higher open should find Resistance at 85.82 and 85.99, while an open below 85.64 may find Support at 85.47 and 85.29.

CANADIAN DOLLAR (CDU6):

The CD opened higher at .8959 and slid to a morning LO of .8954 as the DX rebounded. Prices rose to a morning Hi at our secondary Resistance level of .8980 as a weaker DX and rebound in the energy/metals complex supported the move. Weaker natural gas prices saw traders taking further risk off the table in the energy/metals complex, pressuring the CD lower towards the close and ending the session at .8493, up 19 tics. The s/t trend remains 'negative' as momentum indicators struggle, looking for support from a weaker DX and higher energy/metals prices. A lower open may find Support at .8925 and .8908, while an open above .8953 should find Resistance at .8970 and .8998.

BRITISH POUND (BPU6):

The BP opened higher at 1.8861 and slid to a morning Lo of 1.8825 on the DX rebound. The stronger than expected Retail Sales of + 0.3% sent prices to a morning Hi of 1.8920, furthering the likelihood of another rate hike. Traders were taking profit/risk off the table during the afternoon, ahead of the weekend and the G-7 statement, sending prices lower to a close of 1.8866, up 101 tics. The close above the 9-day MA changes the s/t trend to 'positive' as momentum indicators turn higher suggesting higher prices ahead. Traders should push prices to the 1.9000 level in anticipation of another rate increase by year-end. A lower open may find Support at 1.8821 and 1.8775, while an open above 1.8870 should find Resistance at 1.8916 and 1.8965.

EURO-CURRENCY (ECU6):

The EC opened higher at 1.2724 and followed most foreign currencies lower after a favorable set of U.S. economic data helped the DX and sent the EC to a morning LO of 1.2703. Prices rebounded to a morning Hi of 1.2750 on ‘hawkish’ remarks by ECB Pres. Trichet, signaling a need to be ‘vigilant’ against rising inflation. Prices drifted lower during the afternoon as traders take profit/risk off the table ahead of the G-7 statement sending the EC to a close of 1.2724, up 28 tics. The s/t trend remains 'negative' as momentum indicators turn higher, suggesting higher prices ahead. Higher rates should attract further investment, but traders need to be cautious if the G-7 statement supports a concern for stronger Asian currencies. A lower open may find Support at 1.2701 and 1.2679, while an open above 1.2726 should find Resistance at 1.2748 and 1.2773.

. JAPANESE YEN (JYU6):

The JY opened lower at our Pivot level of .8509 and dipped to .8507, before rebounding to a morning Hi at our initial Resistance level of .8523. Prices retraced to a daily Lo of .8503, before closing the session at .8508, down 3 tics. The trend continues to be 'negative' as carry-traders continue to hold short positions. Help from the G-7 statement may cause a short-covering rally, hitting 'stops' and driving prices higher. Shorts should tighten 'stops' or purchase a 'call' option to reduce exposure. A lower open may find Support at .8502 and .8495, while an open above .8512 should find Resistance at .8519 and .8529.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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