Archived IMT (2008.10.10)

Asian stocks getting crushed after the selling deluge in Wall Street moved into capitulation stage. This is triggering prolonged multiyear highs in the low yielding currencies, while damaging the high yielders such as AUD, GBP and NZD. My Thursday morning piece to clients was titled "Sterling Still the Major Loser" preceded further losses in the currency. As we speak, GBPUSD has broken below its 2- year lows hitting a 5-year low of $1.6896. GBPCHF slumps to a 12-year low of 1.900 as the Swiss franc flexes its low yielding safe haven against the deteriorating low high yield sterling. So which is doing better? Swissie or Yen? The Swiss Franc has tumbled to 86.53 yen, the lowest since August 2005. This comprises a 7% decline this week and an 18% drop from its June record high. But aside from favoring JPY and CHF against GBP, AUD and NZD, using USD as a low yielding play against GBP and AUD remains rewarding in the short term especially as a hedging strategy against shorting USDJPY.