A Down-Under Dollar Play

Today we are adding to the Currency component of the ETF Action model portfolio by initiating a new position. After you receive this Alert, we will allocate 2% of our capital to CurrencyShares Australian Dollar Trust (FXA:NYSE), a fund we listed on our most recent currency Watch List.

As we discussed in Tuesday's Weekly Issue, the U.S. dollar carry trade has been revived, and the clear beneficiaries have been either emerging market currencies or developed countries that can support higher interest rates. Australia's economy has rebounded quickly from the global recession and has better fundamental underpinnings than its G10 peers. This has allowed the Reserve Bank of Australia (RBA) to reaffirm an upbeat economic outlook and begin the process of raising interest rates back to their normal range of 4% to 5%.

Depending on when the U.S. Federal Reserve begins to tighten its monetary policy, the interest rate differential could widen even further, which will support the current trend of selling U.S. dollars and buying either risk- or commodity-sensitive securities.

Regards,

Don Dion

Send email to don.dion@thestreet.com

Recent Alerts

Increasing Exposure
Action: PWB

Adding to this holding in the Style component of our model portfolio as it has shown renewed momentum of late.

11/23/09 - 09:31 AM EST
Buying and Selling
Action: TUR IOO

Closing out one model portfolio holding and establishing another in order to move toward a more diversified global fund.

11/19/09 - 10:37 AM EST

Weekly Issues

Appetite for Risk Is Growing

This is allowing the markets to move higher, despite the weakening technical signs and divergences among the averages.

11/24/09 - 01:46 PM EST
Planning Ahead

We intend to add additional equity exposure, as well as currency and commodity positions in the coming weeks.

11/17/09 - 02:02 PM EST
Building a Balanced Portfolio
Action: DVY DIA QQQQ IYK FDN TUR EWZ

Taking cues from the current phase of the market rally, we will adjust our investing strategy as conditions warrant.

11/10/09 - 02:35 PM EST

Don Dion is the author of TheStreet.com ETF Action by Don Dion (the “Service”). Mr. Dion is also the beneficial owner of Dion Money Management, LLC, a registered investment advisor. The Service is an actively managed model portfolio of ETFs chosen by the author in accordance with his stated investment strategy. Your actual results may differ from results reported for the model portfolio for many reasons, including, without limitation: (i) performance results for the model portfolio do not reflect actual trading commissions that you may incur; (ii) performance results for the model portfolio do not account for the impact, if any, of certain market factors, such as lack of liquidity, that may affect your results; (iii) the price of ETFs chosen for the model portfolio may change in a short period of time, and although the "purchase" or "sale" of an ETF in the model portfolio will not be effected in the model portfolio until confirmation that the email alert has been sent to all subscribers, delivery delays and other factors may cause the price you obtain to differ substantially from the price at the time the alert was sent; and (iv) the prices of ETFs in the model portfolio at the point in time you begin subscribing to the Service may be higher than such prices at the time such ETFs were chosen for inclusion in the model portfolio. Mr. Dion is not restricted from owning any exchange-traded fund, individual securities or options. The purchase and sale price Mr. Dion records for any trade shall be the market price of the ETF recorded fifteen minutes following the email time stamp on the Service’s subscription email alerts. He or the investment portfolios he manages may not execute trades on any investment one (1) business day prior to, or one (1) business day prior following mention in his Service. Mr. Dion will disclose any positions in investments that he directly or indirectly holds or manages, and mentions in the Service.

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