On 19/05/06 12:13, in article
[email protected] om, "David Johnstone"
<[email protected]> wrote:

    > Given the proximity to 1.30 at the time of the prediction,
    > and the observed volatility in the exchange rate, that would
    > seem reasonably likely even if the changes were random.
    > But we'll see around 12.06.06 then!

I initiated a posting a month ago " Apr 19 2006 5:08 pm"
"Dollar losing value with respect to Euro"
where I stated that

"Over the last couple of weeks the dollar/euro rate
has gone from around 1.20 to 1.23. Some currently
projected move is 1.28 dollars/euro this year."


    > "Charting" rates by extrapolating tangents to a curve is a
    > procedure which analysts love, but which seems to have no
    > theoretical or empirical basis.
    >

Using the charts for predicting where one is going is dubious
but they are good at showing were one is, and what
has happened in the past. Many anticipated the sideways
movement of the American stock exchanged base on past
performance. Looks at the long term performance of
the DJI from the late 1920s, http://finance.yahoo.com/q/bc?s=%5EDJI&t=my
There are definite "flat" periods and definite "bull market" periods.

Those that predict are only right by accident. Take Cochon's touted
list of stock he brilliantly invested in a month ago.

Cochon recommended Currently
at at

Nucor $114 104.8

Carpenter Technologies (CRS). $126 112.1

Apple AAPL, $71 63.2

Caterpillar CAT $71.9 74.6

Altria Group (MO) $ 71.9 70.5


If he is a big bucks "investor" (speculator) he will have 10,000 share
holdings
in each. If so, he is losers about $30,000 right now in a month.

OK, since we are commenting on successful predictions, we
should comment on the failed ones too just to balance the picture.

Here we are a month later and the dollar has fallen to 1,25.
And this despite the fact that the prediction of 1,30 was made
at a time when the rate was 1,28 with positive first derivative
and high volatility.

David

    > Here we are a month later and the dollar has fallen to 1,25.

Oops, I meant of course that the Euro has fallen to 1,25 USD.

David

On 14/06/06 6:42, in article
[email protected] m, "David Johnstone"
<[email protected]> wrote:

    > And this despite the fact that the prediction of 1,30 was made
    > at a time when the rate was 1,28 with positive first derivative
    > and high volatility.


Effectively 1.30 was reached, the dollar traded in the 1.29+ range for
a while. Beyond 1.30 to 1.35 has not been anticipated until the end
of the current year.

Chartwise (http://finance.yahoo.com/q/bc?s=USDEUR=X&t=3m)

the dollar has gone through a classical W double bottom
and is moving up in value. So it has broken the pattern
of headed still down and is now moving up. Even if it goes
down, nobody expects it to beyond 1.35. Viewed over
the last year http://finance.yahoo.com/q/bc?s=USDEUR=X&t=1y
it appears having bottomed out.

A move of .04 (1.29 back to 1.25) is a big move on the
option markets. One can buy $1 million in options with
$100,000 up front, a move of 3% amounts to a profit
of $30,000 or a risk investment of $100,000 in a
couple of weeks. The secret of doing this
is like surfing, catching a wave. One big wave
occurred between March to May. Now a speculator
would have betted on a move in the opposite direction
because it had not gone above 1.30, got stuck for
a while. The dollar is now around 1.25 and has not gone
through it. The fundamentals of the dollar remain weak,
however, so I don't think one will "see" 1.20 in this
correction. I think it will go back into the 1.28 region.

The complicating factor is that the world equity markets
are in upheaval. All of them are down, but the US markets
less than others. That and high US bond interest rates will
suck some money back into the USA which decreases pressure
on the dollar, pushing it up. But the overhang of the
balance of payment deficits remain a basic part of the picture.

On 14/06/06 7:59, in article
[email protected] om, "David Johnstone"
<[email protected]> wrote:

    > Oops, I meant of course that the Euro has fallen to 1,25 USD.
    >
    > David


The problem of "up and down" is difficult since the dollar is often
quoted euros per dollar (around 80 cents right now) The inverse
rate of dollars per euros is usually the terms I think of them,
around 1.25 right now.

The same problem occurs in the bond market. Is it going or down?
If the market value of a bond drops the interest rate goes up.
They buyer of the bond is looking for higher interest rates,
the holder of the bond is looking for market value (if
the holder sells before maturity).

If one has the habit of holding until maturity and reinvesting
the proceeds, one is only interested in the interest rate.
If one is holding cash with plans to invest in bonds, one is
interested in the projected interest rates in the next
few months.

Likewise with conversion of money. If one needs 500,000 euros
in 3 months to pay off the purchase of an house or apartment
when does one convert? If one is holding dollars, that is
$625,000 at 1.25 and $650,000 at 1.30, a difference of
$25,000 or the price of a new car. The dollar was at
1.18 not that long ago. Will it return to that level
within the next 3 months? (I think not), will it rise
above 1.25 (I think so) so my choice would be to convert
now.

Earl Evleth schrieb:

    > On 14/06/06 6:42, in article
    > [email protected] m, "David Johnstone"
    > <[email protected]> wrote:
    > > And this despite the fact that the prediction of 1,30 was made
    > > at a time when the rate was 1,28 with positive first derivative
    > > and high volatility.
    > Effectively 1.30 was reached, the dollar traded in the 1.29+ range for

Not really, it peaked at 1,2971 but was only at that level for about
2 days. The point is the prediction for the next month totally went
in the wrong direction; had someone said at 1,29 with positive
first derivative that the Euro would fall to 1,25 in a month, now
*that* would have been a prediction. If I see someone falling past
the fifth floor window I don't need to be a brilliant analyst to
predict
that he will soon have major health problems.