Reiterating AUD support

The merits of the NZD are however overshadowed by the outlook for the AUD. The AUD:USD offers better exposure to commodities for several reasons. I think the Australian food commodity export prices are rising faster than NZ food exports, Australian natural gas exports cover its oil imports, making it effectively a slight net oil equivalent exporter. Subdued property market is slowing consumption like in NZ, but Australia has solid buisness investment in mining industry - thats future productive capacity. Iron ore, coal, gold, copper prices remain high, and most of these revenues are locked in for the next year. For this reason I think the AUD is the currency to hold at least until September, then I would be switching to USD I suspect.

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Andrew Sheldon www.sheldonthinks.com

NZD makes sense as a carry trade

The NZD has been having a rally of late. If you focus on the negative press you might have thought otherwise about holding NZD. The reality is that a weak domestic economy is good for the NZD since it undermines credit growth and domestic consumption, which in turn reduces imports, whilst exports remain resilient. NZ has the benefit of being a food exporter, so it should benefit more in future as we see more general increases in the prices of food. NZ produces little oil so there is some basis for weakness there. NZ is not a great story, but if you are looking for a interest swap (yield) proposition it makes a lot of sense, whether as a carry trade.

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Andrew Sheldon www.sheldonthinks.com