Intervention can be very profitable for CB's Peat. I think the RBA has made a packet in the past as they are usually either selling at highs or buying at lows, and of course, they are usually right!

The BOJ has done pretty well too, but sometimes it has taken a while for their positions to come right for them, but eventually they get their way. I think last time they intervened was around 110, and it went to 104 before turning. They'll be offering around 125 I would guess.

The last major cycle before that saw them bidding at 85.00ish, then offering at 135ish - not a bad turn on a few hundred billion USD (plus forward points)

Zyreon - yes, no doubt about it, he'll tighten again, and probably remain hawkish as well.

The 'special report' Peat was referring to is basically calling for new highs above 7500, with 9000+ being an EW target[xx(][xx(][xx(]

I'll try to reproduce his wave count on my own charts and post it over the weekend (not an EW expert myself, but respect the power of the waves)

7500 is achievable shorter term I guess - 9000+ will need the USD to collapse against everything.

The Uridashi's etc may or may not roll - it'll depend on the trend at the time, but in the past they have only rolled if the currency is in an uptrend.

At the end of the day, these only work if the issuer can achieve attractive sub libor funding once its swapped back to their currency of choice, usually USD (which requires a swap curve well above bonds), and if there is appetite for high yield at retail.

Its the retail market that has all the currency risk, not the issuer, and they either don't understand the risk or don't care...yield rules OK

As well as these issues, we also have momentum models kicking into buy mode as we break higher and higher levels, mainly on the crosses, real money accounts, who play 'lets squeeze the export sector' just before the start of the seasonal peak every year like a broken record, and of course finally we have the local corporates who are probably undercovered (as usual) and are now squealing.

Its a potent combo if you have maturities coinciding with an economic downturn, as well as a down-trending currency - maybe mid/late 2006 will produce that scenario, but in the meantime have to keep an open mind...

Xerof