Alaron Currency Comment

CHICAGO - Jun 15/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Dollar Index (DXU7):

The DX opened higher (yesterday) at 82.82 against most major foreign currencies, as traders expected supportive economic data today and Friday. A stronger than expected PPI of +0.9% and Jobless Claims helped the DX rise to Wednesday Hi of 83.01, before retracing to a morning Lo of 82.76. Traders were cautious after buyers 'backed-away', looking for more conviction ahead of Friday's CPI report. Short-covering into the close sent the DX to 82.89, up 14 tics. The s/t trend remains 'positive' w/ 'over-bot' momentum indicators. A higher core rate should push prices above the Target Resistance of 83.01, otherwise look for traders to take profit/risk off the top heading into the weekend. A higher open should find Resistance at 83.01 and 83.14, while an open below 82.89 may find Support at 82.76 and 82.64.

Euro Currency (ECU7):

The EC opened lower (yesterday) at 1.3339 and retraced to a morning Lo at our initial Support level of 1.3321 against the strenthening DX. Prices rebounded to a morning HI at our initial Resistance level of 1.3364, before drifting lower against a rising DX and ending the day at 1.3348, down 2 tics. The s/t trend remains 'negative' w/ weak momentum indicators. A report from Germany's IfW Kiel Institute, one of five that advise the government, said it expects Germany's economy to expand this year at the fastest pace since 2000.They raised its economic-growth forecast for 2007 to 3.2% from a March estimate of 2.8%. If the DX has trouble closing above the 83.01 level, the EC could receive attention from traders looking for higher yields. A higher open should find Resistance at 1.3368 and 1.3389, while an open below 1.3345 may find Support at 1.3324 and 1.3301.

British Pound (BPU7):

The BP opened lower (yesterday) at 1.9660 after a weaker Retail Sales report showed a drop to 3.9% from May's 4.2% and Housing Prices increased less than expected. Prices slid to a morning Lo at our Secondary Support level of 1.9634, before rebounding during the afternoon session to a daily Hi of 1.9692. As the DX rose into the close, the BP drifted to 1.9674, down 41 tics. The s/t trend remains 'negative' w/ 'weak' momentum indicators. Traders will key off the CPI report and see if there is evidence of a topping formation at 83.01. A higher open should find Resistance at 1.9699 and 1.9725, while an open below 1.9667 may find Support at 1.9641 and 1.9609.

Canadian Dollar (CDU7):

The CD opened lower (yesterday) at .9388 and rose to a morning Hi of .9401 as energy/metals prices rebounded. Prices retraced to a morning Lo of .9377, before adding a few tics during light afternoon trading to end the session at .9380, down tics. The s/t trend remains 'negative' w/ 'neutral' momentum indicators. While traders expect a rate increase at the July 10th 'rate-meeting', remarks from BoC Governor Dodge on Wednesday about the Canadian Dollars strength at these levels had traders 'scratching their heads'. Does he think the CD is 'over-bot' at these levels? If so, traders know what 'one' vote at the meeting will be. A lower open may find Support at .9371 and .9362, while an open above .9386 should find Resistance at .9395 and .9410.

Japanese Yen (JYU7):

The JY opened lower (yesterday) at .8228 and rose to a morning Hi at our secondary Support level of .8235, before the stonger DX and pressure from carry-trade selling sent prices to a morning Lo of .8218. The JY bounced into the close and ended the session at .8227, down 28 tics. The s/t trend remains 'negative' w/ 'over-sold' momentum indicators. Thursday rate-meeting is not expected to announce a 'surprise' rate increase, but could see a more positive spin on the economy and talk about a rate increase in the future, if needed. Sound familiar? We will see if carry-traders continue to add to their 'shorts' or wait for the U.S. CPI. Shorts should tighten 'stops' or buy 'calls' to reduce exposure, while spec's trying to 'catch' the low, should look at 'calls' or 'call-spreads' to reduce exposure. A lower open may find Support at .8218 and .8210, while an open above .8227 should find Resistance at .8235 and .8244.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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