Today’s top gainer is the NZD, the New Zealand kiwi, up 2.2% vs. USD, 1.8% vs. JPY, and 1.68% vs. EUR. This comes on the back of recent gains in both gold and oil up today to 1058 and 79 respectively. Also, helping the gains was Helicopter Ben, who again today re-iterated that accommodative monetary policy will be pursued for “an extended period”.
This means its game on for the commodity currencies, who benefit from the carry trade as investors seek out higher yielding currencies. As a result, both the Aussie and the Kiwi have traded to 14-month highs, back to the levels pre-credit crisis collapse which sent investors back to the US dollar in a flight to safety.
As confidence rises here in the US, (a rising stock market will do that- recent history be damned), investors will seek out more “risk” and move to the currencies that will benefit from strong commodities prices and higher interest rates.
Let’s take a look at a daily chart of Kiwi vs. US dollar (NZD/USD) (click chart to enlarge)
While this chart is a trend followers dream, its always difficult to jump in as it may seem close to a top. I usually like to wait for a pullback or for a sideways move (consolidation) before attempting to initiate a new trade, although I’m not certain that I will get one.
But for now, it looks like Bernanke is going to continue to get away with his “strong dollar policy” as the US dollar continues to tank against all currencies (except maybe the Yen- but that’s another discussion). If US stock earnings continue to “surprise” (meaning beat analyst low-ball expectations) and commodity prices hold up, expect Bernanke to sit idly by and do nothing as the US dollar continues to get crushed.
To learn about how you can participate in this global market and protect your dollar savings, be sure to check out our
No comments:
Post a Comment