A CD/$ bank trader is at present quoting a small figure bid-ask of 35-40, while the rest of the market is trading at CD1.3436-CD1.3441. What is implied regarding the trader's beliefs by his prices?
The trader have to think the Canadian dollar will depreciate against the U.S. dollar and thus he is trying to decrease his inventory of Canadian dollars by discouraging purchases of CD by standing eager to buy $ at only CD1.3435/$1.00 and offering to sell from inventory at the slightly lower than market price of CD1.3440/$1.00.