The strongest currency in trading today is the NZD.
A snapshot of the strongest and weakest currencies at the start of the NY trading day.
The RBNZ released it’s Financial Stability Report. Although the central bank reiterated that the recent decline in the NZ is welcome, the currency remains overvalued, at unsustainable and unjustified level, the currency rallied higher. They also said that the OCR at 3.5% is still low by historical standards. That the neutral rate to be 4.5% and that mortgage lending restrictions would remain in place. Looking at the NZDUSD chart below the pair based against the 0.7793 level – which in the past has not been able to sustain rallies – and moved higher.
The NZDUSD pushed away from the 0.7793. Key level.
The weakest currency is the GBP. The BOE and Mark Carney lowered growth and inflation forecasts. They now estimate that inflation will slow below 1% within months and return to 2% in 3 years. They project that inflation will be 1.2% vs 1.9% previously. in 2015 they expected 1.4% vs 1.7% previously. For 2016 they kept inflation at 1.6%.
They also lowered growth forecast to 2.9% in 2015 vs. 3.1%. For 2016, the growth was reduced from 2.8% from 2.6%. They cite the slower European economy and that is reflected in the slashing of export growth to 1% from 2.25 this year and to 4% next year from 5.25% previously. They also lowered EU GDP for 2015 to 1.25% from 1.75%.
GBPJPY has fallen back below the 50% retracement at 183.95
The GBP is weakest against the JPY. Looking at the chart above, the GBPJPY made new highs above the 50% of the longer term move down from the 2007 high to the 2011 low. That level comes in at 183.955. The price has since tumbled back below this key level and it will now be eyed as upside resistance (RISK) for shorts.
Stocks and Bonds
Stock market indices in Europe and in pre-US trading are lower. The German Dax is down 1.27%. German Wholesale prices fell by -0.6% in the current month and are down -0.7% YoY. Yields on 10 year bonds are looking a little softer but not by much.
A snapshot of the stock and bond markets
Key Events and Releases
The US Mortgage Applications showed a -0.9% fall in the current week. Purchases rose by 1.1%. Refinancing’s fell by -1.9%.
US Mortgage Applications
US Wholesale Sales will be released at 10 AM with the estimate for +0.2%. Wholesale Sales are forecast to decline -0.1% (vs -0.7% last month). Feds Kocherlakota speaks on Monetary Policy at 1:30 PM ET.
In Canada the Teranet/National Bank HPI for October will be released at 8:30 AM ET. Last month the index increased by 0.4% MoM and 5.4% YoY. There are no estimates this month.
ECB Draghi is scheduled to speak at 9 AM in Rome and ECBs Weidman is on tap to speak at 12 PM ET.