June 21, 2010 – “Waltzing Matilda” Hits the Top Ten

Featured Trades: (FXA), (FXC), (AUSTRALIAN DOLLAR),
(AUSIE/YEN CROSS), (AUSIE/EURO CROSS)

Currency Shares Australian Dollar Trust ETF
Currency Shares Canadian Dollar Trust ETF


3) ‘Waltzing Matilda’ Hits the Top Ten. The Russian Central bank today said it is moving a portion of its reserves into Australian (FXA) and Canadian dollars (FXC). They join a procession of central banks that have been pulling the ripcord on the troubled euro and landing into currencies with vastly better fundamentals. This is music to my ears because I have been stampeding readers into these hard, resource backed currencies for a year (click here for the last call). Not only have the outrights done well, so have the crosses, such as Ausie/yen and Ausie/Euro. Of course, Ausie fans were given a scare when the government announced a 40% resource tax, which it now looks will not take effect until 2012. We’ll let the debate about the actual cost of the tax rage on down under, as there is an indecipherable mix of subsidies, loss carry forwards, and infrastructure incentives involved. The bottom line is that interest rates there are high and rising, while ours are low and stagnant, to the benefit of Ausie holders, and at the expense of Buck owners. Australia is running a trade surplus and a labor shortage, not American style trade deficits and labor gluts. If you’re wondering who’s that singing ‘Waltzing Matilda’ in the shower, it’s me.

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