The Super Mining Tax stand down will help the AUD in the long term

While both the European Union Nations and the British Government are tightening budgets the commodity based export countries with strong public finance positions are set to be the safe haven currencies over the balance of 2010. Canada, Norway and Australia are well placed with relative low levels of debt and whilst the USD, JPY and Swiss Franc have been the safe haven currencies in the past the AUD looks well placed to outperform some of it larger rivals. Its value has declined 7 percent to the USD since the markets again fell off the edge in April however the S&P 500 has fallen 14 percent for the same period.

Commodity based currencies have held up relatively well and with the Australian government recently backing down on its Super Profits tax and this is further good news for the AUD long term. Commodity markets have come off the boil and likely to take a breather for a little while, however the Australian, Norwegian and Canadian currencies are looking relatively stable in comparison to other blue chip currency nations such as the USD. All 3 countries have raised interest rates this year which means their economies are expanding. Unless there is a severe downturn in commodity orders out of China all 3 currencies should appreciate towards the balance of 2010, although AUD traders be aware it may have a breather whilst commodity prices have come off the boil.

Commodity based currencies were our long term tip back in January and our expectations have not changed for the rest of 2010.