Aussie Aussie Aussie

The Australian dollar has generally moved lower against the US dollar, along with just about every other currency, in the last few weeks. I read the almost daily comment about the Aussie on Bloomberg last night that said the Aussie's lift in the last couple of days has been because of the move in gold. The article reminded readers the Aussie has a 0.96 correlation to gold.

The article then quoted a couple of analysts saying that the lift from gold will be less important than the erosion of the yield differential (advantage) that has Australia has had for a while.

So it boils down to the gold (and other commodities) correlation versus yield advantage. Your opinion would drive what type of trade you would make. It seems to me that the yield differential is more of a short term issue where increased demand for commodities (if you believe in that) is more of a long term driver.

That commodities have rotated back into favor for the first time since the 1970's makes sense to me. That this would be at the expense of equity markets from service based economies also makes some sense.

The leads me to still believe exposure to Australia and Canada and a couple of others will be the right thing for a while to come yet.

On another note, it would appear my content is working out at theStreet.com and RealMoney.com. They have started ETF Tuesday on the free site. I do not know if I will be the only one contributing to this or not but I'm glad I haven't made an ass out of myself after ten minutes.