Pictures say a thousand words. We have been bullish on the prospects for commodities and high yield currencies since the end of last year. As they say good things come to those who wait……..now we reap the rewards for our patience. The broad CRB Index (the most widely followed commodity index) has made a clear breakout and the trend is strong. The strength in commodities is being confirmed by the strength in commodity currencies such as the Aussie and Canadian dollars (not to mention the Rand, Ruble, Kiwi, and Real). How much upside can we expect? We don’t know but we know that while commodity currencies remain strong expect more upside in commodities. We try to read the intentions of the market through inter-market analysis (the action in one market or asset class should be confirmed by the action in another)…..it stands to reason that commodity currencies and commodities should advance in lockstep.
