The Dow is now down in the 12,800 range and has comfortably left 13,000 behind. The Dow transports hit another 52 week low yesterday also. This continues to pull down the carry trades, especially those that involve the yen. USD/JPY and especially EUR/JPY and GBP/JPY. The yen has been the best hedge for a falling stock portfolio and that same theme continues on. Keep an eye on this because this theme will only likely continue on as stocks continue to break down.
Yesterday's Fed Minutes didn't seem to add any hopes of a recovery in the U.S. In fact, it probably foretold of more rate cuts to come for the U.S. dollar.
So watch for the yen to continue higher over time. The Swiss franc will be a second beneficiary as stocks fall. Once high yielders recover, the Aussie dollar should be one of the first ones to turn upward because they still are in "rate hike" mode due to high inflation.
As the U.S. dollar continues to fall (0verall), it will aid the Euro's rise towards 1.50. If these Arab countries de-link from the dollar in the upcoming months, it will only fuel the Euro higher against the dollar. Stay tuned folks....we live in interesting times.
That's the world as I see it.
Sean Hyman
Currency Director
The Sovereign Society
www.money-trader.com
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