Alaron Currency Comment

CHICAGO - Jan 11/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

U.S. DOLLAR INDEX (DXU6):

The DX opened higher at 84.61 as traders react to Fed Vice-Chrm. Kohn concern about 'inflation' takes any rate cuts further out pass into the second half of 07'. A better than expected report on the Trade Deficit sent the DX to a morning Hi of 84.91, before drifting lower into the afternoon session. Chicago Fed Reserve President Moscow, confirmed Kohn's 'inflationary concerns', keeping the DX at the upper range of the day's trading range. Prices maintained most of the day's gain,ending the session at 84.85, up 33 tics. The s/t trend remains 'positive' with 'firm' momentum indicators. With rate decisions Thursday from the ECB and BoE, longs should tighten 'stops' or purchase a 'put' to reduce exposure at a critical .618 fib level. A higher open should find Resistance at 85.00 and 85.16, while an open below 85.13 may find Support at 84.60 and 84.36.

Canadian Dollar (CDH7):

The CD opened lower at .8505 and slid to a morning Lo at our initial Support level of .8497 as a stronger DX and weaker energy prices continue to add pressure. Prices bounced to a daily Hi of .8522 after a better than expected increase in Nov. Trade Surplus, prompting some traders to 'cover' shorts. Prices ended the session at .8521, flat. Weaker energy/metal prices should continue to weigh on the economy ahead of the BoC Monetary Policy Report on Jan. 18th. Will we see a 'on hold' vote or rate decrease? It may be determined by the outlook of its biggest trading partner,the U.S. The s/t trend remains 'negative' with 'over-sold' momentum indicators. We may see further short-covering by 'weak' shorts ahead of the weekend, but without increasing energy prices, the rally may be short-lived. A higher open should find Resistance at .8530 and .8538, while an open below .8513 may find Support at .8505 and .8488.

British Pound (BPH7):

The BP opened lower at 1.9376 as DX strength and concern about Thursday's MPC rate decision weigh on prices. Despite a proposed rate increase of 25 bp, traders have discounted the increase and look for the gap to narrow against the EC. Prices rose to a morning Hi of 1.9390, before retracing to a morning Lo of 1.9322 as the DX rose on better than expected economic data. The BP managed to bounce higher towards the close, ending the day at 1.9336, down 66 tics. Traders are looking for an 'unchanged' vote, delaying what has already been discounted, with a possiblity of 'accomodating' the markets based on current data. Sound familiar? The s/t trend remains 'negative' with weak momentum indicators. A lower open may find Support at 1.9309 and 1.9281, while an open above 1.9349 should find Resistance at 1.9377 and 1.9417.

Euro-Currency (ECH7):

The EC opend lower at 1.3026 and rose to a morning Lo of 1.3031, before retracing to a morning Lo of 1.2970 as the DX rallied. Traders look for the ECB to keep rates on 'hold' at Thursday's ECB rate meeting, but increase by 25bp in February. Of course, traders will await the comments from ECB President Trichet to see if 'strong vigilence' will be part of future or lower inflationary pressure and decreased consumer spending in Germany, due to the increase in the VAT, will cut expectations of more than a 25bp increase next month. The s/t trend remains 'negative' with weak momentum indicators. A weaker open may find Support at 1.2955 and 1.2932, while an open above 1.2993 should find Resistance at 1.3016 and 1.3054.

Japanese Yen (JYH7):

The JY opened lower at our Pivot level of .8453, hit a morning Hi of .8458 and retraced along with other major foreign currencies to a morning Lo of .8434 as the DX rallied on the Trade Deficit reduction. Prices bounced to .8438 mid-day and traded within a tight range before ending the session at .8437, down 19 tics. The s/t trend remains 'negative' with 'over-sold' momentum indicators. As long as Finance Minister Omi continues to his influence to accommodate the economy, i.e. don't hurt exports, traders will continue to take advantage of the carry-trade and take advantage of higher rates outside of Japan. A lower open may find Support at .8421 and .8406, while an open above .8440 should find Resistance at .8455 and .8474.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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