Alaron Currency Comment

CHICAGO - Dec 18/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

U.S. DOLLAR INDEX (DXU6):

The DX opened lower at 83.64 and slid to a morning Lo of 83.53 after an increase in the Current Account deficit of $8.5B. Prices rebounded to a morning Hi of 83.93, before drifting to 83.81 as we enter the afternoon session. The NAHB Housing Index reading of 32 v Oct.33 had little effect on the DX as we experience 'light' volume due to Holiday trading. Prices traded lower going into the close and ended the session at 83.71, down 4 tics. The s/t trend remains 'positive' with stochastics looking 'expensive'. Longs should tighten 'stops' or purchase a 'put' ahead of the economic data this week in a thin Holiday market. A lower open may find Support at 83.52 and 83.32, while an open above 83.72 should find Resistance at 83.92 and 84.12.

CANADIAN DOLLAR (CDH7):

The CD opened higer at .8684 and rose to a morning Hi of .8695 on a better than expected LEI report. Prices retraced against the rising DX and lower energy prices; hitting a morning Lo of .8664 as we begin the afternoon session. Prices hit a daily Lo of .8656 and bounced towards the close as the DX weakened to end the session at .8661, up 1 tic. The s/t trend remains 'negative', with 'oversold' momentum indicators. The CD will need help from higher energy prices, stronger economic data and a weaker DX to entice bargain hunters or at least get 'shorts' to cover. Shorts need to tighten 'stops' or purchase a 'call' to reduce exposure. A lower open may find Support at .8646 and .8632, while an open above .8671 should find Resistance at .8685 and .8710.

BRITISH POUND (BPH7):

The BP opened lower at 1.9500 and rose to a morning Hi of 1.9530, before pressure from a stronger DX sent prices to a morning Lo of 1.9440. Prices bounced to 1.9463 as we begin the afternoon session. Buyers continued to push prices higher into the close of 1.9498, down 11 tics. The s/t trend remains 'negative' with weak/neutral momentum indicators. Traders need further confirmation that the economy is strong enough to 'handle' another rate increase, before committing to adding at this level. Traders will eye the U.S. economic data and look for any weakness in the DX to buy BP. A higher open should find Resistance at 1.9539 and 1.9579, while an open below 1.9489 may find Support at 1.9449 and 1.9399.

Euro Currency (ECH7):

The EC opened higher at 1.3148 and rose to a morning Hi of 1.3172, before following most other foreign currencies to a morning Lo of 1.3105. Prices bounced to 1.3127 as we begin the afternoon session. The EC continued higher into the close after bouncing off the .382 Fib level and ending the day at 1.3152, up 16 tics. The s/t trend remains 'negative', while momentum indicators are weak/neutral. The U.S. economic data this week will be key to determining the direction of the EC. Weak economic data; buy breaks in the EC. A higher open should find Resistance at 1.3181 and 1.3210, while an open below 1.3143 may find Support at 1.3114 and 1.3076.

. JAPANESE YEN (JYH7):

The JY opened higher at .8584 and rose to a morning Hi of .8590, after comments from the BoJ suggested that they expect to see an inflation-adjusted GDP for 2007 of 2.0%. Although rate increases are likely in Q1 of 07', investor confidence has looked outside Japan for higher yields. Prices retraced to a morning Lo of .8557 as the DX gathered strength , but bounced to .8567 as we begin the afternoon sessionThe JY traded in a thin range towards the close and ended the day at .8566, down 4 tics. The s/t trend remains 'negative' and 'over-sold' as traders await the results of this weeks rate decision meeting. Shorts should tighten 'stops' or purchase a 'call' option to reduce exposure. Time to look at 'call' options or buy futures at .8625 stop. A lower open may find Support at .8552 and .8538, while an open above .8571 should find Resistance at .8585 and .8604.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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