Thursday, July 1, 2010

Bookkeeping: Closing U.S. Dollar (UUP) - Changing to British Pound (FXB)

The U.S. dollar has been benefiting from being the least ugly sheep; eventually this will end as the U.S. remains the only country who could care less about its long term obligations and spends like a drunken sailor.  An interesting thing has happened in the past few weeks... the mini U.S. aka Great Britain has seen its currency benefit since it announced REAL steps to cut government spending. [Jun 22, 2010: UK Joins Austerity Parade]  Its currency has surged as people realize they seem serious versus certain countries which are "forming commissions" to look at their debt. (in fact it began surging a few weeks before the public announcement)   Remember, Cameron said they were looking to slash each public department by a whopping 25%!  Can you imagine the U.S. even cutting a department by 5%?  The federal government worker would not stand for it. ;)   There *may* be a sea change happening here.  Either way I am going to sell my US Dollar position, and give the British Pound a whirl.

I sold the last 1% exposure in Powershares DB US Dollar Bullish (UUP) with a 1.5% loss, and will start a 1.5% stake in Currency Shares British Pound (FXB).

Volume is weak in this ETF with only 110K shares a day, so it's more difficult to move in and out of. 

My prefernce would be to buy the German mark if it were available... but of course I am about a decade late on that one.  If the Austrlian and Canadian dollar were not hammered each time the risk trade were taken off, those would also be good choices.

I am also interested in purchasing long equity positions here to begin hedging long.  If you exlude my dollar long, gold long, and silver long I am only about 8% long.  It's time to take some long side risk for a trade at least; I have not sold my short hedges...yet.

Long Currency Shares British Pound in fund; no personal position

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