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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (13784)	10/30/2008 4:34:08 PM
From: gregor_us	1 Recommendation Respond to of 71407

The lack of currency volatility over the past few years has driven some macro folks crazy, as I understand it basically destroyed a bread and butter strategy that involved arbitraging the volatility against the forward rate (not sure if I have this totally correct--but I know I understood it when I read about it last year). It was basically a currency version of a futures curve roll yield trade, when the a futures curve is in backwardation. etc. Anyway, I mention this because the forecasts for the CAD and the AUD have gone uber-wide. Some think AUD will be back at .90 next year, or .85. And others think it will go to .5000 or even as low as .4000 I'll venture that volatility premia in currency futures are high enough to reflect such divergent views. In general, as global currencies blew up after credit blew up, and after equities blew up, I feel now that was really got dislocated globally in October was price itself. Every asset on earth got jammed to extreme levels. And then the coup de grace was doing the same to the currencies. On some level this is very exciting, because it means that just about every participant has had their views also dislocated. So the only honest people around right now are the one's who allow visibility into next year is very low. My view is that the the banking systems of AUS and CAN are strong, and the government balance sheets are solid--with AUS even more solid. I get the whole repatriation thing into USD for sure. But, It can' last longer than Q4 2008. G