Multicurrency Commentary 3rd Quarter 2011
During the 3rd quarter the dollar staged a powerful safe haven rally. Though our strategy emphasized currencies associated with more hawkish central banks, and stronger balance sheet nations (like Norway and Sweden), the broader market thought otherwise and allocated funds to the Japanese yen. We believe countries that are good stewards of their economic resources will have stronger currencies over the long term. In addition to this preference, our investment process leads us to underweight currencies associated with weaker economies and central banks with accommodative monetary policies. As a result, we have had a disposition to be perennially underweight the yen.