Over and Under Valuations of Currencies

Source: Morgan Stanley

As you can see from the graph, the AUD and NZD are leading the charge versus the USD. As I mentioned yesterday, the CAD is lagging the rest of the commodity currencies because of the inter-connectivity between the Canadian and U.S. economies. Eventually, I think that the CAD will catch up. If you want to be a contrarian, you should go long GBP and short either the AUD or NZD.