Alaron Currency Comment

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

U.S. DOLLAR INDEX (DXU6):

The DX opened higher at 83.42 after concerns that Friday's better than expected Payroll Report will fuel the inflation fires burning at the FOMC meeting Tuesday. Over-night short covering ran the DX to our initial Resistance level of 83.60, when sellers hit the rally driving prices to a morning Lo of 83.17 as we begin the afternoon session.Prices slid to a daily Lo of 83.02 and bounced to a close of 83.09, down 21 tics. The s/t trend remains 'positive' with momentum indicators weaker ahead of the FOMC meeting. Rates are expected to remain 'on hold', but concerns about core inflation above the 2.0% 'comfort' level will likely be mentioned. Wait for the comments before 'shorting' rallies. A lower open may find Support at 82.87 and 82.66, while an open above 83.24 should find Resistance at 83.45 and 83.82.

CANADIAN DOLLAR (CDZ6):

The CD opened higer at .8703 and slid to a morning Lo of .8699 on weaker than expected Labor Productivity. As the DX weakened, prices bounced to a morning Hi at our Pivot level of .8707 as we enter the afternoon session. Prices bounced to a close of .8712, up 13 tics. The s/t trend remains 'negative', with weak momentum indicators. The CD needs help from higher energy prices, which could come about at the next OPEC meeting, along with stronger economic data to offset the 'pause' by the BoC.

A lower open may find Support at .8699 and .8687, while an open above .8712 should find Resistance at .8724 and .8737.

BRITISH POUND (BPZ6):

The BP opened lower at 1.9485 on DX strength and concerns that the proposed rate increases in the BP will be exceeded by the ECB. Prices rebounded to a morning Hi of 1.9552 as the DX retraced and 'spec's' bought the 'dips' as we begin the afternoon session. Prices rose to a daily Hi at our Pivot level of 1.9590 and drifted to a close of 1.9585, up 62 tics. The s/t trend remains 'negative' with firm momentum indicators. Traders are looking for the DX to weaken and will await further confirmation after the comments. A higher open should find Resistance at 1.9622 and 1.9658, while an open below 1.9553 may find Support at 1.9517 and 1.9448.

Euro Currency (ECZ6):

The EC opened lower at 1.3181 as traders took profit/risk off the table ahead of Tuesday's U.S. Fed meeting. As the DX 'topped-out', the EC rose to a morning Hi at our Pivot level of 1.3257 as we enter the afternoon session. Prices continued to trade on either side of our Pivot during the afternoon, before ending the day at 1.3255, up 51 tics. The s/t trend remains 'negative' with firm momentum indicators. Traders will await the FOMC results and continue to 'buy' breaks until the ECB signals no further need to raise rates. A higher open should find Resistance at 1.3286 and 1.3318, while an open below 1.3234 may find Support at 1.3202 and 1.3150.

. JAPANESE YEN (JYZ6):

The JY opened lower at .8540 as the 'bullish' commentary out of the BoJ last week fades into 'doubtful' catagory after Friday's Q3 GDP revision lower to 0.8% from 2.0%. Prices slid to a morning Lo of .8537, before rebounding to a morning Hi of .8565 as we enter the afternoon session. The JY traded in a thin range during the afternoon and ended the session at .8564, down 32 tics. The s/t trend remains 'negative' with weak momentum indicators. Fallout continues from Friday's liquidation and will likely continue as long as doubts about the economy and rate increases continue. A higher open should find Resistance at .8577 and .8590, while an open below .8557 may find Support at .8544 and .8524.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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