Alaron Currency Comment

CHICAGO - Oct 12/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

U.S. DOLLAR INDEX (DXU6):

The DX opened lower at 86.69 and rose to a morning Hi of 86.76, before retracing to our Pivot level of 86.61, as traders take profit/risk off the table ahead of the release of the 'minutes' from the last Fed meeting. Prices bounced to 86.63 as we start the afternoon session. Richmond Fed President Jeffrey Lacker continued to carry the 'inflation' banner during his afternoon speech, ahead of the FOMC release, offerring further insight of things to come. The 'minutes' did stress the need to 'contain' inflation, which helped the DX climb to a daily Hi of 86.87, before drifting lower towards the close of 86.89, up 12 tics. The s/t trend remains 'positive', crossing the 200-day MA, but becoming 'over-bought' on s/t momentum indicators. Longs should tighten 'stops' or purchase a 'put' to reduce exposure. A higher open should find Resistance at 87.04 and 87.18, while an open below 86.82 may find Support at 86.68 and 86.46.

CANADIAN DOLLAR (CDZ6):

The CD opened lower at .8822 as the energy/metals complex continues to take the 'wind' out of the CD's sails. Prices retraced to our initial Support level of .8810, before rebounding with the energy/metals complex to a morning Hi of .8831 as we approach the afternoon session. Results from the last Fed meeting helped the DX and sent most other major foreign currencies lower, pushing the CD to a daily Lo of .8800 and closing the day at our secondary Support of .8805, down 41 tics. The s/t trend remains 'negative', with momentum indicators 'over-sold', suggesting a test of the Target Support level of .8793 on 7/24. Shorts should tighten 'stops' or purchase a 'call' option to reduce exposure. Needs help from the energy/metals sector or higher rates to rebound. A lower open may find Support at .8793 and .8781, while an open above .8812 should find Resistance at .8824 and .8843.

BRITISH POUND (BPZ6):

The BP opened higher at 1.8571 and slid to a morning LO of 1.8545, before talk of a 'rate increase' still a possibility, lifted the BP to a morning Hi at our secondary Resistance level of 1.8595. Prices slid to 1.8580 as we begin the afternoon session as traders adjust positions ahead of the Fed 'minutes'. The DX rallied after release of 'bullish' comments that took any hope of a rate 'cut' off the table, as inflation concerns held. The BP followed most other currencies lower to a daily Lo of 1.8529, before bouncing higher towards the close of 1.8545, down 10 tics. The s/t trend remains 'negative', with weak momentum indicators suggesting lower prices. The 'over-sold' position suggests 'caution' ahead as 'short-covering' may occur. Shorts should tighten 'stops' or purchase a 'call' option to reduce exposure. A lower open may find Support at 1.8518 and 1.8490, while an open above 1.8556 should find Resistance at 1.8584 and 1.8622.

Euro Currency (ECZ6):

The EC opened lower at 1.2586, slid to a morning Lo of 1.2582 and rebounded to a morning Hi at our secondary Resistance level of 1.2604. Prices slid to 1.2597 as we begin afternoon trading. With the DX gaining strength on the FOMC 'minutes' data, the EC retraced to a daily Lo of 1.2584, before closing the session at 1.2563, down 17 tics. The s/t trend remains 'negative' as momentum indicators continue lower into the 'over-sold' areas. Will lower Q4 GDP and slower EZ inflation alter future proposed rate increases? Shorts should tighten 'stops' or purchase a 'call' to reduce exposure. A lower open may find Support at 1.2539 and 1.2516, while an open above 1.2572 should find Resistance at

1.2595 and 1.2628.

. JAPANESE YEN (JYZ6):

The JY opened higher at our initial Resistance level of .8440 and rose to a morning Hi at our secondary Resistance level of .8450, before falling to a daily Lo at our initial Support level of .8420, as the DX gained strength. The JY bounced higher into the close and ended the day at .8430, flat. Negative Trend & Negative momentum indicators. N. Korea continues to keep traders on the defensive, which could lead to lower prices ahead. Any reconciliation could lead to a 'short-covering' rally. Shorts should tighten 'stops' or purchase a 'call' option to reduce exposure. A lower open may find Support at .8416 and .8402, while an open above .8434 should find Resistance at .8448 and .8466.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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