Multicurrency Commentary 2nd Quarter 2010
In our last commentary we offered that the major free float currency markets would remain in a tug of war:
The dollar would rally and the yen would outperform when stocks fell and the Eurozone debt crisis moved to the fore.
The dollar would likely fall when stocks stabilized, the demand for safe haven assets diminished, and the market focused on a Federal Reserve on hold.
At the start of the 2nd quarter our position reflected a belief that monetary and fiscal stimulus will work over time (our overweight towards commodity currencies), that safe haven moves would nonetheless occur (a modest overweight to the yen as an insurance policy and stabilizer), and concerns about the euro would remain considerable (a large underweight to the euro).