Right now, it makes sense to have some USD denominated securities in your portfolio. Further, if you are a “Snow Bird” planning to head south in the next month or two (many of my clients are), it might make sense to buy your US dollars now rather than later.
From an investment point, the USD is coming off of major support against a broad basket of currencies, as seen on the weekly chart below. It’s also attempting to break the near termed downtrend that began earlier this year. If this movement lasts, the US dollar has about 5% upside (to $23 on the chart above) before significant resistance. If you hold ETF’s based on foreign indices, consider buying some of them hedged to the USD if available.
Taking it a step further, if you like buying U.S. sector ETF’s or broad index ETF’s trading on the TSX, consider buying unhedged variations for more potential upside. Our weekly chart of the CD$ below clearly shows continuation of the downtrend vs. the USD. Lower peaks and troughs indicate no base action for the CD$ at this time. An early start to tapering by the US Federal Reserve would only enhance this trend. Strong support comes in very shortly (around $0.94)—if this is not held, look out below.
Keith speaking in Orangeville
If you live near Orangeville, come out to the Orangeville public library on Tuesday December 3rd at 1:00pm for the last visit of our 2013 Sideways book tour. I’ll be speaking about – what else–technical analysis techniques for profitable and safe investing.