Happy holiday shopping season. While most of you are shopping with US dollars, I decided to alter my currency allocation. Picking a page off of Gartman’s recommendation last week, I think it makes great sense to be short the Euro right now. Back in May, somehow you could sense (or at least I did) that Greece’s bailout was not the only hole in the Euroship. Ireland has turned to the forefront of bad news, with Portugal and the Spanish powerhouse (or should I say foreclosurehouse) next in the queue. It will be curious to see if the Europeans get their act together. Right now, the only folks who seem to have a clue are the Germans, and it may even be in their best interest to exit the EU—just a thought. Right now, I’d rather bet on contagion and against the shaky currency.
The trade: short 20 FXE @$130.65; this trade now appears in my Top Five
On the other side of the world, Australia seems to be steady-eddy. It is a strong, resource producing nation with stable interest rate expectations.
Purchasing some Australian Dollars will mitigate the size of my Euro short as well as diversify away from the US Dollar.
The trade: long 15 FXA @$96.60
