Sunday, May 16, 2010

AUD Index

Here is a chart of the Australian Dollar versus an equally weighted basket of the six other major currencies (USD, EUR, CHF, JPY, CAD, GBP):



Some recently asked me if I was still bullish on AUD (it was one of my top picks in early 2009).

Nope.

Someone else just emailed me wondering why AUD hasn't dropped more versus USD, what with all the bad stuff happening in the world.

I am not really sure what the hold up is, but I do think that AUD/USD will sell off sharply at some point (this year, I would imagine). Right now European currencies are taking the heat, but before long the wishful thinking of the inflationists will start to be recognized for what it is, and plays like AUD which have been co-opted by the inflationist block will sell off.