Coelacanth

Are the Tides Turning for the Canadian Dollar?

Hmmmm..... I don't follow this pair but you may be on to something here Ms. Lien.

Secretary Peters said that Americans drove 9.6 billion fewer vehicle-miles traveled (VMT) in May 2008 than in May 2007, according to the Federal Highway Administration data. This is the LARGEST drop in VMT for any May, which typically reflects increased traffic due to Memorial Day vacations and the beginning of Summer, AND THIS IS THE THIRD-LARGEST MONTHLY DROP IN THE 66 YEARS SUCH DATA HAVE BEEN RECORDED. Three of the largest single-month declines - each topping 9 billion miles - have occured in December.

To boot this is a May report and given the further increases in gasoline prices in June and July it's very plausible that gasoline demand worsened. If oil prices continue to ebb we could see a bullish USD break-out against the Loonie.

www.dot.gov/affairs/do...

A Surprise in Store for the Dollar?

What I love about days like today is how no one is paying attention to a rapidly deteriorating situation in the euro-zone.

As Ms. Lien correctly points out.....French, Italian (and Germany) all showed pronounced weakness in their industrial output for May and there is every indication that the euro-zone may have contracted in the 2nd qtr. (As a reminder...the U.S. hasn't experienced negative growth yet).

Too boot, Mr. Trichet has indicated that he is willing to tolerate a flaring up of inflation in the short-term to see it moderate in the medium term (early to mid-09). IMO as the fundamentals continue to deteriorate in the euro-zone, traders will begin to "price-out" further rate increases and the euro will fall in value.

IMO the greenback appreciating against the euro will be less a reflection of dollar strength as much as it will be a reflection of the euro losing value against other currencies.

It's a contrarian play and a bit dicey but I think a trader could make a very good case for shorting EUR/USD from the 1.59 - 1.60 handles.

Good work Ms. Lien.