Let's face it, commodities have de-coupled from the USD and supply/demand relationship due primarily to one reason - liquidity. If the global economy is not going to do better, commodities will do well because central bankers will continue to run printing presses. If the global economy is going to sustain the recovery, commodities will also do well because demand for things such as oil and cotton will go up. Most importantly, the charts agree! The Aussie has recouped most of the decline against the dollar since the latest correction while the dollar index (DXY) has gone up primarily due to weakness in the Euro and the Pound. Even though the Canadian dollar and the New Zealand dollar have lagged behind the Aussie, their respective charts have shown pockets of strength and look ready to move higher. Politicians have to realize that printing money does not enrich countries and it will continue to destroy the purchasing power of consumers in the U.S. and the developed nations in Europe through currency devaluation. Therefore, I am recommending buying the commodity currencies against the USD, EUR and GBP and buying commodities such as copper and sugar. On the other hand, I continue to believe that the dollar, being the "tallest midget in the room," will strengthen against the Euro and the Pound as the greenback benefits from the debt crisis.
