Howdy all,
Banks bashed, Miners Rally!!
Not much follow through on the specs but should turn around soon. imo
12:45pm: A bounce in crude oil and other commodity prices Tuesday halted a plunge in currencies of countries linked to natural-resource exports. The respite will be short-lived, according to OppenheimerFunds, which expects the Aussie dollar to drop to 60 US cents over the medium term.
The Canadian, Australian and New Zealand dollars are off to the worst start to a year since the financial crisis. The nations are grappling with a 29 percent drop in raw-material prices amid swelling supplies and slowing demand in China that may wipe out as much as 14 per cent of the Canadian dollar's value in the next three years.
Next up, they'll have to contend with the Federal Reserve's plan to raise interest rates this year, which is forecast to boost the U.S. dollar.
"Compared to the US talk about raising rates and tightening policy, the commodity currencies are going in the exact opposite direction," Alessio de Longis, a money manager in the Global Multi-Asset Group at Oppenheimer Funds, said from New York. "These currencies are not cheap by any means."
De Longis projected the Canadian dollar will weaken 14 per cent in the next one to three years. He estimated the Aussie will fall in the same timeframe to 60 US cents and the kiwi to drop to 50 US cents.
The Canadian dollar weakened 0.2 per cent Thursday to an 11-year low while the kiwi lost 0.5 per cent.
Even as the Reserve Bank of Australia held interest rates steady and spurred a currency bounce, de Longis said he expects central banks in the commodity-exporting nations to continue easing monetary policy, sending their currencies tumbling versus the greenback.
The Bloomberg Commodity Index fell to a 13-year low Monday after Chinese manufacturing gauges slowed, clouding the outlook for demand. In contrast, the U.S. currency has rallied against all 16 major peers in the past 12 months on signs that the Fed is getting closer to raising rates.
"Caution is still in order as today's Aussie gains are corrective in nature,'" Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co, said in a note. "It is obvious that RBA policy must remain accommodative."
A US fund manager's crsytal ball warns the Aussie will fall a lot further in the coming few years.
Good luck to all
Do Your Best
