Wednesday, June 11, 2008

The Dollar looking real Perky

Can it be said anymore clearly.....

Bernanke Says Fed to Resist Price Expectations Surge

this from and article on Bloomberg. A Strong inflation stance coupled with increased talk of unwanted dollar weakness both from the States and Europe and I see no reason for the dollar not to make a big move up (OK I have been saying this for a while with little luck).

Now lets take a look at a couple of trades that I think have some potential.

A strong Canadian dollar. Today the BOC did not cut rates as was expected. I was pleased and surprised to see that they did not make the anticipated rate move. I think this will lead to a period of a stronger Canadian dollar but I do not think it should be bought against the dollar. Look at Eur/Cad or Gbp/Cad as I think they offer more opportunities.

Latan America. Latam currencies look ready to weaken a bit. This is not a trade that I am in love with but rather one which can be entered with a tight stop. If I am correct and the dollar does better, crude should come off (on a combination, slowing economy and stronger dollar) which should hurt latam currencies stronger do to oil revenues. I think the currencies pairs with the most upside are:


The problem here is yield, at 13%(for Brazil) any sideways trading gets very expensive, very quickly. But I think there is some potential here so it is on my radar screen.

Scandinavia. Again this call depends on crude. If I am correct and we top out soon then I see this region struggling to remain strong. I am looking at putting on a basket trade here and will update more once I have time to look at it more closely.

Just a few ideas and thoughts please let me know what you are thinking.

Here is the LINK to the article sited above.

Good Luck and Good Currency Trading.

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