Comments on: USD/CAD imbalance in the making? http://thegestaltshift.com/wordpress/usdcad-imbalance-in-the-making/ thinking outside the box to spot and profit from fx Wed, 14 Jul 2010 19:58:28 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Paul Stafford http://thegestaltshift.com/wordpress/usdcad-imbalance-in-the-making/comment-page-1/#comment-179 Paul Stafford Mon, 10 Aug 2009 16:28:26 +0000 http://thegestaltshift.com/wordpress/?p=223#comment-179 Hi Kris, Here are several additional reasons to believe the CAD rally might be short-lived 1) the poor BoC yield. AUD is still at 3%, but CAD is at 0.5%. 2) automotive sales will tank after the junker trade in program ends. 3) longer term, commodities won't stage a sustained rally (I think Q4 will not be good) until employment actually shows increases instead of smaller decreases. IMHO, the best way to play this is with a bull call spread on $/CAD with a 6-8 month expiry. Long at 1.08, Short 1.15 or 1.16. you could almost get the whole position for free if you also sold a put at 1.0 Paul S Hi Kris,

Here are several additional reasons to believe the CAD rally might be short-lived
1) the poor BoC yield. AUD is still at 3%, but CAD is at 0.5%.
2) automotive sales will tank after the junker trade in program ends.
3) longer term, commodities won’t stage a sustained rally (I think Q4 will not be good) until employment actually shows increases instead of smaller decreases.

IMHO, the best way to play this is with a bull call spread on $/CAD with a 6-8 month expiry. Long at 1.08, Short 1.15 or 1.16. you could almost get the whole position for free if you also sold a put at 1.0

Paul S

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