I regularly read the ‘Daily Pfenning’ by Charles Butler of Everbank.com.
Today’s issue was especially bearish on the dollar.
The Yen finally started to move back up hitting a one month high over the weekend on speculation the Bank of Japan report tomorrow will show an improved economic outlook. The BOJ will make their rate announcement tomorrow before releasing a semi-annual report that will outline the bank’s forecasts for prices and the economy. Any hint at higher rates before year end should propel the yen back toward 110.
Other Asian currencies gained last week also, with the Thai baht rising to a seven-year high. Thailand’s central bank raised its growth estimate for next year to between 4.5 percent and 5.5 percent from a previous forecast of between 4 and 5.3%. It also lifted its prediction for export growth this year. While the gains in the Singapore $ were met with possible intervention by their central bank, the Bank of Thailand governor said the central bank would let the markets do their job in stemming the rise. So it looks like we have a green light for further increases in the baht.
The Australian dollar also had a good week with several reports showing the Asia-Pacific regions growth is picking up. Retail sales rose .5 percent after climbing .3% in August, and building approvals started to rise again. Australia’s economy added more than 200,000 new jobs in the past five months, sending the unemployment rate to a 30-year low. Things continue to look up for the Australian dollar, a currency which continues to be one of our favorite.
Finally, India’s central bank will likely raise interest rates for a fourth time this year as record economic expansion and loans growth stoke inflation. Expect a quarter point increase in interest rates tomorrow, which should strengthen the rupee. Many reports are now expecting the Rupee to strengthen to 44 by year end.
As previously mentioned, I bought some Australian Dollars and a Japanese REIT. A strengthening of the Yen will boost the value of my REIT, which buys apartment buildings in downtown Toyko.
I’m willing to share the info on the Japanese REIT with anyone who makes 10 posts on The Weekend Investor. Talk about a shameless plug!!!!
Gold was also up today. Its not too late to buy some and hedge against the devaluing dollar!