Alaron Currency Comment

CHICAGO - Nov 1/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Dollar Index (DXZ7):

The DX opened higher at 76.74 as traders heed a signal that further rate cuts may be on hold, causing some short-covering. After concerns from Credit Suisse, Deutsche Bank and AIG that sub-prime woes continue to plague the financial sector, carry-traders took profit /risk off the table as equity prices tumbled and flight to quality helped the DX rise to a morning Hi of 76.80. Prices retraced into the aftenroon session, hitting a mid-day Lo of 76.48, before bouncing into the close of 76.56, up 10 tics. The s/t trend remains 'negatve' w/ ' over-sold' momentum indicators. Further weakness in the equities should keep carry-traders on the sidelines or continue to take profit/risk off the top, at least until Friday's Payroll Report. A lower open may find Support at 76.42 and 76.28, while an open above 76.62 should find Resistance at 76.76 and 76.96.

British Pound (BPZ7):

The BP opened lower at 2.0783 and slid to a morning Lo of 2.0726 as the DX moved higher. A weaker PMI report was off-set by favorable comments from BoE Chief Economist Charles Bean, stating that the bank can't relax on inflation. While many expect rates to be 'unchanged' at the Nov. 8th rate meeting, questions about a rate decrease in Q1 may be addressed. Prices rose to a mid-day Hi of 2.0847, before drifting lower into the afternoon session and closing the day at 2.0812, up 27 tics. The s/t trend remains 'positive' w/ 'over-bot' momentum indicators.Traders will react to the Asian equity open and take further profit/risk off the table should the sell-off continue. A stronger Payroll Report could support the DX and pressure most other major foreign currencies. Longs need to tighten 'stops' or buy 'puts' to reduce exposure.A higher open should find Resistance at 2.0858 and 2.0904, while an open below 2.0804 may find Support at 2.0758 and 2.0704.

Euro Currency (ECZ7):

The EC opened lower at 1.4433 as 'sub-prime' concerns pressured the financial sector of the equity markets, forcing carry-traders to take profit/risk off the table and seek a flight to quality in Government Securities.Prices slid to a morning Lo of 1.4413 on DX short-covering, before rebounding to a mid-day Hi at our Pivot level of 1.4486. Prices drifted lower towards the close and ended the session at 1.4469, down 41 tics. The s/t trend remains 'positive' w/ 'over-bot' momentum indicators. As equity traders continue to take profit/risk off the table, carry-traders should follow. The DX will need strong Payroll Report to support higher prices otherwise carry-traders will take advantage of any weakness . Longs should tighten 'stops' or buy 'puts' to reduce exposure.A higher open should find Resistance at 1.4499 and 1.4529, while an open below 1.4456 may find Support at 1.4426 and 1.4383.

Canadian Dollar (CDZ7):

The CD opened higher at 1.0590 amd rose to a morning Hi at our initial Resistance level of 1.0600, before following most major foreign currencies lower to our initial Support level of 1.0510, as traders took profit/risk off the table and energy/metals prices retraced. Prices bounced to 1.0544 mid-day and ended the session at 1.0558, down 13 tics. The s/t trend remains 'positive' w/ 'over-bot' momentum indicators. Traders will key on the equity markets, softer energy/metals and the Payroll Report. Concerns about 'credit-markets' could see its largest trading partner's economy slow further than expected, raising expectations of a possible rate 'cut' by the BoC to help exporters. Longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 1.0602 and 1.0646, while an open below 1.0556 may find Support at 1.0512 and 1.0466.

Japanese Yen (JYZ7):

The JY opened lower at .8687, hit a morning Lo of .8685 and rose to a morning Hi at our secondary Resistance level of .8772 as carry-traders covered shorts and took profit/risk off the table as equity markets sold off. Prices drifted lower towards the close and ended the day at .8746, up 30 tics. The s/t trend remains 'negative w/ ' neutral' momentum indicators. While the BoJ would like to 'lessen' the carry-trades, unless they merit a rate increase the yield-gap will continue to attract speculators, arbitragors and Japanese individuals. A weaker Nikkei 225 should lead to further short-covering by carry-traders over-night, unless Europe rebounds. A higher open should find Resistance at .8786 and .8825, while an open below .8735 may find Support at .8696 and .8645.

Bob Kozak

Alaron Research Team

800.462.4691

bkozak@alaron.com

www.alaron.com

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