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Daily Market Commentary

New home sales disappointed yesterday, giving further proof to the theory that the second wave down leg of the US housing market is underway.  Don't be surprised if you start reading more newspaper stories about foreclosures and firesales in certain markets.

 

  The US$ continues to be very weak around the world, with the exception of Japan.  Yen is currently the dog currency of the world, as Japanese continue to invest abroad in search of higher yields.  As they look directly south, they can sell their Yen earning 0.5% and pick up NZ$ which now will earn them 7.75% (the RBNZ hiked rates last night).  Even though the BoJ has raised their rates twice, they are still extraordinarily low by world standards.  Both domestic investors and international alike are still playing their own version of the carry trade.

 

  One of those currencies to own, although lower yielding, continues to be the CAD$.  Our rise has been sharp this month, perhaps faster than warranted.  While big foreign takeovers, high oil prices, high gold prices and relatively strong fundamentals provide some good reasons to own the CAD$, a breather in the rally here seems likely.

 

 



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