Dollar Down, but Bears may be Over-reaching

A run on the US dollar is underway. While momentum suggests there is scope for additional near-term losses, the risk is the dollar bears are getting ahead of themselves, Rather than jump aboard what appears to be a southbound dollar express, traders might be better advised to take some profits and wait for the next train. Money managers and corporations should consider taking advantage of the run-up in foreign currencies to increase hedge ratios.

Risks Mounting In Turkey

Turkey faces only two challenges: politics and economics. These are conspiring to increase the downside risks of the Turkish lira. The news today is that the EC has put off until next month the decision to break off membership negotiations with Turkey There are two main areas of concern. The first is Turkey's refusal to open its ports to Cypriot ships. The second is Turkey's respect for human and minority rights. These issues can be addressed, if there is the political will. Prime Minister Erdogan indicated that he would be willing to consider amendments to Article 301 of the penal code that places curbs on freedom of speech.

Trust and The Canadain Dollar

The main shock in recent days was the announcement from Canada’s Finance Minister, Jim Flaherty, that the trust form of corporate organization would no longer enjoy its tax exempt status. This was a bolt from the blue. This past spring Flaherty promised that the coalition government would not tamper with the trust’s status. The previous Liberal government had become concerned about the issue after there was some musings from an executive of one of Canada’s largest banks about the attractiveness of the trust form.