From Chuck Butler's "A Pfennig For Your Thoughts"
...what this Japanese Trade Deficit points out is just how weak the global growth picture is. And that’s why the Aussie dollar (A$) is getting sold this morning. I’ve long said that the A$ is the proxy for global growth, so this is not a good picture for global growth. But. if it’s like just about every other piece of data we see these days. give it a couple of days, and everyone will forget about it!In China overnight, the People's Bank of China Gov. Zhou said, "adjustments to interest rates and bank's reserve requirements are still possible. Use of either tool can't be ruled out." - Zhou Now, in the old days (not that long ago really), if Zhou had said these things, the global growth campers would be drooling all over themselves with excitement. But on a night when Japan has shown that they have taken a ride on the slippery slope of twin deficits, Zhou's comments basically went unnoticed by the markets. But not by me! I read what he said, and I've told you all this many times in the past. The Chinese don't say things just to hear themselves talk. They say things so investors and what have you, can prepare to be ready .
These remarks by Zhou, open the door further for additional monetary stimulus. Remember folks. China has the interest rates that can be cut, unlike the U.S., & Japan. And China has the Treasure chest of reserves that can be used to stimulate their economy, unlike the U.S. and Japan that have to go further in debt to stimulate their respective economies.
Source: http://www.dailypfennig.com/2012/08/22/japan-joins-the-twin-deficit-club/
From Money Morning's "Four of the Best Currencies to Invest in 2012"
By Larry D. Spears[only] The Canadian dollar (CAD) remains on our [original] list of the top currencies to hold for the remainder of 2012 and into 2013. As before, that choice is based on Canada's sound banking system, its smaller budget deficit and its wealth in energy and mineral resources. Plus, it's the only one of the major currencies to establish a solid trend over the past three months, rising steadily from an early June low of 1.0447 to the U.S. dollar to 0.9879 late last week, just barely off the 12-month high of 0.9868 set in late April. That trend should continue, based on recent Canadian economic reports and the lure of relatively attractive interest rates, with the CAD possibly approaching 0.9700 by year-end.
Aside from the Canadian dollar, the Australian dollar (AUD) is also a strong choice based on resource strength. Although growth has slowed a bit in China and Japan, Australia is the closest source of the raw natural resources those countries need. Australia's own economy has also held up much better than other countries with closer ties to Europe, and though there's some concern the strong currency could hurt exports and thus growth, the Reserve Bank of Australia has shown no interest in cutting interest rates. And, as with Canada, the higher rates make Australia a good place for foreign interests to park cash. That's why the Australian dollar has also trended sharply higher over the past three months, rising from a June 1 low of 1.0423 to the U.S. dollar to a recent quote of 0.9525. If the trend continues to year-end - and current forecasts indicate it should - the AUD could surpass the high of 0.9212 to the U.S. dollar that it set last February.
The third currency of interest right now is the Mexican Peso (MXN).
Mexico has its problems - most notably a government challenged by the drug cartels and internal violence - but the peso has benefited from strong speculative interest among currency traders, who want exposure to the American markets without having to hold dollars. (Mexico is the third-largest U.S. trading partner, behind only Canada and China.) Long peso positions in the foreign-exchange (Forex) markets rose to their highest level in four months last week - nearly 82,000 contracts - and this has helped push the Mexican currency to 13.1274 pesos to the dollar, up from a low of 14.5955 on June 1. As with the Australian dollar, a continuation of that trend could carry the peso to a new high before year-end, topping the 12.6825 mark set in March.
For those looking beyond the New Year, Money Morning Chief Investment Strategist Keith Fitz-Gerald continues to recommend acquiring holdings denominated in the Chinese yuan (CNY). He notes that, though the yuan has been under pressure since the release of China's second-quarter growth figures, "that doesn't change the currency's long-term attractiveness, nor undermine China's ascendency to global economic leadership." He also expects the yuan to continue gaining strength against the dollar because of China's ongoing efforts to bypass the U.S. currency through the establishment of yuan-denominated swap agreements with major trading partners, thereby further weakening the dollar's role as the world's reserve currency. For those leery of direct yuan investments, Fitz-Gerald recommends utilizing an exchange-traded fund for access, purchasing shares in the Wisdom Tree Dreyfus Chinese Yuan Fund (NYSEArca: CYB).
However you choose to do it, focusing your investments on currencies that are strengthening against the dollar is one of the best ways to put extra cash in your pockets.
Source: http://moneymorning.com/2012/08/22/four-of-the-best-currencies-to-invest-in-for-2012
