The US dollar

The global wrecking ball that is the US dollar is definitely looking expensive again.

The challenge is working out expensive relative to what, and why, and how you get exposure to them.

We think the euro, yen, and EM currencies are fairly cheap, as are their local equity markets. That’s the point of that last bit in the above paragraph; it’s easy to say “yen is low”, but are you buying JGBs, or the Nikkei, and are you buying the hedged or unhedged products?

With the dollar, the S&P 500 has fallen quite a bit in the local currency, and, given the AUD has lost so much more, unhedged funds have done quite a bit better. At some point, the super strong dollar will weigh heavily on US corporate profits, so we see good odds that both hedged and unhedged funds will roll over further.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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