Commodity Red Flag...

This morning the South Korean won is hitting again this morning a new low. This is important to watch unfold as it could have repercussions to the upside for the US$ and the commodities to the downside (not to mention the C$).  In this chart, the Asia Dollar Index, the CRB (Commodity basket) and the Australian Dollar (another commodity currency, like the C$ but less liquid) and the move to the downside is clear.  Recall, China’s Renminbi is still pegged to the US$ so watching the currencies of the smaller Asian countries who have benefitted from not only China’s economic boom directly but also indirectly from China outsourcing could prove to be a clearer leading indicator of global economic slowdown.

Mark Steele is also highlighting in his comment this morning that Asian Sovereign CDS are wider (attached).