Alaron Currency Comment

CHICAGO - Dec 5/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

U.S. DOLLAR INDEX (DXU6):

The DX opened higher at 82.53 as 'shorts' take profit/risk off the table and await further conviction that fundatmenal weakness will continue. Prices rose to a morning Hi of 82.66, but a weaker than expected Pending Home Sales report of - 1.7% sent prices to a morning Lo of 82.39, before bouncing to 82.45 as we begin the afternoon session. The DX traded at the lower 'rung' after most of the 'shorts' covered, as prices drifted lower to a close of 82.42, 'flat'. The s/t trend remains 'negative' with 'over-sold' momentum indicators. Traders may cover ahead of Friday's Payroll Report or Thursday's BP and ECB rate meetings. The s/t trend remains 'negative' with A lower open may find Support at 82.24 and 82.05, while an open above 82.45 should find Resistance at 82.64 and 82.85.

CANADIAN DOLLAR (CDZ6):

The CD opened higher at .8757 and rose to a morning Hi at our initial Resistance level of .8759, before retracing on DX short covering that sent the CD to a morning Lo at our initial Support level of .8717. Prices bounced to .8732 as we begin afternoon trading and continued higher towards a close, hitting a daily Hi of .8767 and ending the session at .8766, up 28 tics. Talk of higher energy prices via another cut by OPEC should help the CD as shorts cover and specs bargain hunt. The s/t trend remains 'negative' with weak/ firm momentum indicators. A higher open should find Resistance at .8783 ad .8800, while an open below .8750 may find Support at .8733 and .8700.

BRITISH POUND (BPZ6):

The BP opened lower at 1.9758 as 'weak' longs take profit/risk off the table on DX short-covering and ahead of Thursday's MPC rate meeting. Prices slid to a morning Lo of 1.9738, before bouncing to 1.9789 heading into the afternoon session. As the DX retraced towards the close, the BP recovered a bit, to end the sesison at 1.9800, down 6 tics. While some profit-taking may be called for after the 'Thanksgiving Rally', questioning the number of proposed rate increases vs the number of U.S. Fed decreases may off-set. Holding Dollars is not in favor by most Central Banks and diversifing into the BP, EC or other major foreign currency that has a rate increase in its future is. The s/t trend remains 'positive' with 'over-bought' momentum indicators. Buy 'breaks, dips, retracements', but use some risk management, because fundamentals can and do change. A higher open should find Resistance at 1.9825 and 1.9849, while an open below 1.9781 may find Support at 1.9757 and 1.9713.

Euro Currency (ECZ6):

The EC opened higher at 1.3314 and slid to a morning Lo of 1.3301, before rebounding to a morning Hi of 1.3345. Prices slid to 1.3336 as we begin afternoon trading. Prices traded in a thin range towards the close, ending the session at 1.3337, down 6 tics. The s/t trend remains 'positive' with 'over-bought' momentum indicators. Traders will look for further conviction to take the EC to a higher level, otherwise weak longs may take profit/risk off the table ahead of Thursday's ECB policy meeting and Friday's U.S. Payroll Report. Fundamentals should continue to dictate the mid/long term outlook of higher prices. A higher open should find Resistance at 1.3354 and 1.3372, while an open below 1.3328 may find Support at 1.3310 and 1.3284.

. JAPANESE YEN (JYZ6):

The JY opened lower at .8661 after a weaker than expected Inventory Spending report showed corporations spending 12% vs expected 15% y/y. Prices slid to a morning Lo of .8653, before bouncing to a morning Hi of .8691 as we enter the afternoon session. The JY drifted lower into the close to end the day at .8686, down 1 tic. The s/t trend remains 'positive' with momentum indicators approaching 'over-bought' levels. With interest rate increases on 'hold' and the MOF concerned about lower 'exports' to the U.S., I would look for consolidation at these levels. A higher open should find Resistance at .8700 and .8715, while an open below .8677 may find Support at .8662 and .8639.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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