wmeubank@ocp.kcmo.com
THE REAPER
P.O. Box 84901, Phoenix, Arizona
(October 23, 1997) CURRENCIES: The flow of foreign funds into the U.S. Dollar is slowing. This is pressuring the U.S. Buck. Rising interest rates in Europe are also competitive, supporting the European currencies. German interest rates are likely to move higher toward year end. The Swiss economy has picked up slightly. This could support a Swiss rate hike. The December Japanese Yen is having difficulty moving much above .82 support, amid the ongoing implosion of the Japanese economy and stock market. The Canadian Dollar and Australian Dollar have moved back down to long-term support levels which should represent good value. The British Pound should see higher interest rates before year end due to strong economic data. Britain will not join the EMU until after the elections in 2002. The British Pound is one of the strongest currencies presently against the U.S. Dollar. The December British Pound encounters stiff resistance in the 1.64-1.66 range, however. The December German D-mark must overcome .58 resistance, as must December Swiss Franc rise above .70 resistance to really establish a significant major uptrend. If the U.S. Dollar Index closes below 96, the trend will accelerate down. The December U.S. Buck must close above 1.00 to reaccelerate the uptrend. The Asian currencies, with the exception of the Japanese Yen, should be near lows, as a result of panic selling the week of October 24th. Monitor the Singapore Dollar, the New Zealand Dollar, and Australian Dollar particularly in this regard. Rumors that the regional financial crisis in Singapore pushed up nonperforming loans at Singapore banks, (3% of their loans was denied) denied by the Monetary Authority of Singapore. Nevertheless, it led to a knee jerk sell off of the Singapore Dollar to a three-and-a-half year low against the U.S. Dollar.
RECOMMENDATION–Futures investors profitably long December British Pound use 1.609 open protective stops; partial profits taken. Futures investors may purchase December German D-mark with .560 open protective stops. Futures investors may purchase December Canadian Dollar with .714 open protective stops.
R.E. McMaster, Jr.
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