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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: 8bits who wrote (72286)	9/28/2006 7:58:56 PM
From: CapitalistHogg™	Respond to of 206317

Have you taken all the factors into play..? Interest rate differentials, Current account status, Budget Surplus/Deficit (Canada has a federal government and current account surplus..) The easy answer is no. I'm certainly not an expert when it comes to currencies. I had about a 8k education a few years ago when I tried to day trade the market. I was clearly outclassed and I consider myself to be a pretty good timer so I quit FX and went back to play stocks and options. This time around my main thrust was this commodity blow up and how to play the resulting carnage that I felt was inevitable. I chose currencies to be the vehicle and the focus specifically was on crude. Most everything else was simply a sideshow. The USDCAD pair is almost completely unaffected by the USD. Seriously IT DOES NOT CARE. The US economic releases have a daily impact but over the longer term the USD is (within reason) completely irrelevant. So that variable is eliminated from the radar. Interest rate differentials certainly are a component, the idea of earning a little interest appeals to me being long the USD, however, rollover charges are eating the entire bonus. M&A activity especially the Inco deal in which CVRD is going to pony up 20? billion in loonies is the main reason IMO that the CAD is still so high. 20 billion is a lot of currency to purchase and that could single handedly be holding up my trade. George Soros broke the Bank of England with a near equivalent amount. So yeah that could be a problem, but it's a one off flow so when they stop buying it could be look out below. (As a side note and semi conspiratorial the price of copper and nickel will fall AFTER the deal is done as well) Technically the USDCAD pair has formed a beautiful 4 year trendline. If this stupid trade ever breaks my way it should be pretty obvious that the trend has turned. I think it could go for a good long while but my eye will be on CL for ultimate direction. I could go on with other inputs into this trade but at some point you have to make a decision. It really eventually comes down to positvie negative or neutral. I ask myself over the longer term is there much more room for the loonie to advance up? Currencies are cyclical so IMO there isn't much room left for up, but there is a lot of room for down. If commodities stagnate or continue to decline then I don't see how the loonie can go anywhere but down. If for no other reason the CAD is capped by its 28 year high against the dollar. The CAD topped out with a lot of other financial instruments in May of this year. If it breaks that level I would be floored and all busted up as well.