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Strategies & Market Trends : Canadian Dollar -- Ignore unavailable to you. Want to Upgrade?

To: Rob Toor who wrote (52)	12/19/1997 2:00:00 PM
From: TAPDOG	Respond to of 103

The Can$ gets hit when Asia has problems. It looks like the Bank of Canada has given up trying to defend 70 cents. They've already spent a lot of money on forex intervention and they raised rates. Historically, they've always been pretty skillful at intervention, so I think they will let the Can$ go a bit lower, and on some slow-trading days between Christmas and New Years they will intervene and sell U.S. dollars. I've been playing the short side of the futures market, but at this level the risk-reward isn't there. I'd say that the Can$ will go slowly lower until the Asia problems are out of the news. Then we'll get a rally. BTW, Can$ options on the IMM in Chicago have been reasonably priced.

To: Rob Toor who wrote (52)	12/25/1997 1:35:00 AM
From: Ed Huang	Read Replies (1) \| Respond to of 103

Rob, Sorry for not getting back to you earlier. I agree with Tappis' and like to add one more reason I think it may be relevant to the situation in the last few days. On Dec 12 the Canadian central bank raised the interest rate by 1/2 % point to 4 1/2 %. That was a big jump. It showed that the Canadian central bank was some what desperate to try to halt the slippery slide of the currency. It worked initially, the March CDN dollar jumped from 70.40 to over 71 in a few minutes. But within an hour or so the market quickly pushed it back down to 70.60 level. Which indicated the market was not satisfied with the 1/2 % rate increase. In this situation, it's quite discouraging to the CDN central bank who have been working hard to intervene in the market by selling the U.S. dollars and then tried their most powerful measure by hiking the interest rate then found out it was not working. According to some estimate it needs another 1/2 % rate jump to defend the CDN dollar because of the current Asian situation. The CDN central bank can't afford it and probablly feel it's not worth it to hike the rate again (at least not right away). And they don't have much US dollar reserve to intervene in the market strongly. This situation is also quite discouraging to the bulls and encouraging to the bears, this became one of the reasons to cause the CDN dollar fell further in the last few days, IMO. Apparently, for now we need to watch the Asian situation, CDN interest rate and some other factors to speculate the CDN dollar. Chart wise, CDN $ is still moving along a down trend line. We need to see the downtrend line to be broken before we can expect any meaningful up move. JMHO. Best of luck.