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Bank of New York Mellon Senior Currency Strategist Michael Woolfolk offers tips for investing in currencies.
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Just what does the Fed's decision mean for the US dollar and other key currencies and -- that -- play for your portfolio -- too nervous about stocks.
Joining us now out of Fox Business exclusive Michael Wolff welcomed so bloody series a senior currency strategist.
At Bank of New York Mellon and and -- you can make money in currencies can't -- in a very -- -- in a very quick way -- and explain to people who have never bought or sold the currency or invested in the way that is best.
That they able to do that out of the health kick start.
Well certainly one of the ways he can invest in foreign exchanges to go on to a online brokerage system and you can buy the currencies outright you can also go in the futures market and trade the dollar index.
Another way to invest in currencies is through ETF so though this is a budding.
A very new type of market and the liquidity the efficiencies are not quite there yet.
But -- that certainly an opportunity a way that a lot of professional investors go that I think is certainly open to.
Retail is to buy equities overseas.
Don't hedge your currency exposure.
If you like the country and you're investing for that reason.
Quite likely the currency's going to appreciate you we can to see currencies appreciate in in good economic conditions where equities -- rally.
So people are looking is saying that -- really nice Michael but I don't know what I'm supposed to like all right let's do this adversely.
Right now we're looking at real volatility in the US dollar so let's put out to the site for the moment and talk about.
The worst currencies right now -- invested so but didn't you or two ideas of stay away.
Okay that the two major currencies you -- will stay away from you wanna be defensive about if not outright -- is the the Euro.
For obvious reasons short -- if you don't already -- it.
You can't talk.
OK so you not only wanna be short euros.
Or be defensive and in in the -- -- you also want to stay away from Swiss francs the reason being is that the Swiss franc.
Wants to strengthen against the -- But the Swiss National Bank their Central Bank.
Is forcing it not to know the words they're in intervening in the market they're maintaining a cross -- -- floor of one point two.
-- to it to switch back and thoughtful way to do that is they just.
Pour Swiss francs -- -- the markets so that it weakens correct absolute -- so they're they're sellers a Swiss franc buyers of Euro so whenever the Euro weekends.
The Swiss franc weakens lockstep with it.
See this is what worries me about currency -- -- and that is that that you've got central banks who are in away distorting her manipulating because they get her but we don't want currency's so strong that it's too expensive for everybody else.
But you say there are some opportunities here we just talked about the two you don't like one of those three you do like great.
Okay in terms of the majors I think you have to love the US dollar you love the US dollar because.
Needham growth here is certainly outpacing growth in Europe it's it's -- -- growth and and much of the G-7 I think what you like the US dollar also as the currency.
First and last resort when it comes to the safe haven play.
And that is when you're uncertain about market conditions when you don't like what's happening in Europe.
You keep your money in US dollars -- temporarily -- and that's where I think this summer as the crisis in Europe continues to play out.
That's where not only be retail investors but also the professional traders will go number two.
Number two has to be the end.
Japanese investors have very few opportunities to invest at -- at least with a reasonable yields so when it comes to.
Yield enhancement they take the money offshore when times turn bad.
They bring the money back home.
For capital preservation that's what we're seeing right now the yen is performing at least as well as the US dollar and is expected to do so for the rest of the summer.
And finally number -- if I get to talk about my favorite my my favorite currency play really for the next six months to twelve months is the Canadian dollar -- like the Canadian dollar.
Not only as a well run economy.
Great fundamentals but also.
When we do see some easing of tensions over in in Europe and in some risk appetite being taken.
In the marketplace you're going to see commodities perform well and has -- perform well the Canadian dollar's gonna take off we're very close to parity here to come very close to parity in fact dollar Canada.
You're gonna see that drop probably below zero point 95 -- the Bank of Canada raises interest rates not many people are we looking at core inflation.
They're both at or above 2% in Canada in the US.
That's going to continuing get worse candidate raises rates before the US which will be good for the Canadian dollar.
Michael Wolf while teaching us how to invest in currencies teaching you listen you guys have to do look at other opportunities if you're too nervous about stocks thank you so much into.
Michael is with the Bank of New York Mellon what's it.
