While recent news on the US economy, especially the non-farms payroll data, as been positive (OK, more like less negative than expected), in the past weeks, a number of powerful long term market trends have continued in currency and commodities markets and should continue over the coming months, albeit with the usual short term counter moves. In sum, these include:
- The weakening dollar against all major currencies.
- The ensuing up trend in commodity prices (commodities are priced in USD) and their related currencies, the CAD and AUD against other major currencies.
However, we remain skeptical that the multi-month rally in equity markets will endure. Thus we do not recommend new long positions in them, and await shorting opportunities.