POUND AND CANADIAN DOLLAR CAPTURING ATTENTION

  Interest in the currency futures market
  has shifted to the soaring British pound and the potentially
  explosive Canadian dollar, and away from the dull Continental
  and Japanese currencies, analysts said.
      The June pound, which added 6.3 cents over the past
  week-and-a-half to reach a new contract high of 1.5930 to the
  dollar on Monday, has spawned a new-found speculative boom.
      "Brokers have to push their clients somewhere...and
  technically, the pound is in the best shape," PaineWebber
  analyst Jason Gillard said.
      "We've tried to take a bullish approach to the pound, and
  we're going to stay with that, there's no reason to change,"
  Smith Barney analyst Craig Sloane said.
      Many traders took on long pound/short West German mark
  futures positions, although some of those cross-trades were
  liquidated yesterday, Sloane said.
       The fundamental keys to the pound's rise have been
  relatively high U.K. interest rates and a vague optimism
  surrounding the British economy, analysts said.
      "Money seems to be chasing yields," William Byers, of Bear
  Stearns, said of the 10-1/2 pct U.K. base lending rate.
      Many analysts are skeptical about further gains in the
  pound, on the inference that the Bank of England will seek to
  relieve upward pressure on the currency by pushing down
  interest rates after the nation's budget is released March 17.
      The budget itself could have an impact, depending on how
  well it is received, but analysts say relative interest rates
  and oil income remain the main influences on the currency.
      However, the market may be able to absorb lower U.K.
  interest rates, as it has done when other countries have cut
  their discount rates, and extend the pound's rally, Sloane
  said.
      The Canadian dollar has not been rising like the pound, but
  Sloane and other analysts cautiously predicted a big move soon.
      The sideways price pattern in the June contract, with
  smaller and smaller price ranges, has formed a "bull flag" on
  price charts, technically-oriented analysts said.
      "It makes for an explosive type of situation that often
  leads to a breakout," in this case to the upside, Sloane said.
      Byers agreed there was potential for the June Canadian
  dollar to rally above the 77.00 cent level from the most recent
  close at 74.80 cents to the U.S. dollar.
      "At this stage of the game I'd call the market long-term
  positive, but for the technical burden of proof you need a
  close above (the previous contract high of) 75.25," Byers said.
      As to the traditionally more active currencies, stability
  was the catchword and reluctance the watchword among analysts.
      Sloane said it was important that June Swiss francs and
  June German marks held above support at 0.6400 and 0.5400,
  respectively, closing at 0.6438 and 0.5430.
      Yesterday's rebound showed the market was still very
  respectful of the Paris accord, and the threat of central bank
  intervention by the G-5 nations plus Canada.
      "We may still probe to see what the parameters are," Byers
  said, "but people are very reluctant because they don't know
  where the central banks will be (to intervene)."
      Gillard said the mark could drop to a previous price
  consolidation area around 0.5250 based on the profoundly
  sluggish West German economy, but that he would be a buyer at
  that level.
  

