Time to get some opinions on what to expect on the currency front in 2009.
The general consensus seems to be continued USD and YEN strength on the back of further stock market loses around the world. I tend to agree although some are suggesting the USD will go down the toilet. I'm placing the following bets:
I'm weighing in heaviest on AUD/YEN short since I think we are in for a fresh round of deleveraging in the first quarter of 2009. The terrible state of the Japanese economy should see lots of YEN repatriation and worldwide rising commodity inventories should see commodity currencies like the AUD getting clobbered. I think the ECB will continue cutting rates as the European economy deteriorates, they really won't have much choice when the stats already say disinflation and soon enough deflation. I think USD should strengthen as volatility remains high, but the first half of the year will tell the story. Of course, one has to remain nimble in these unusual times so as always it's important to review positions as we move along.