The US$ continues its descent

Unlike the BoJ and apparently the Fed based on comments from Bernanke and Dudley, the BoE decided to be more patient (for now) and chose not to enlarge its QE policy and left alone their current plan. In response, the pound is rallying to the highest level since Jan. The issue specifically with the UK however is a sticky inflation issue where CPI is at or above 3% for 8 straight month’s y/o/y. With a benchmark rate at .5%, negative real interest rates of 2.5%+ is quite stimulative already. The ECB will do nothing as expected. The Australian$ is rising to a record high vs the US$ after Sept job growth of 49.5k far exceeded expectations of 20k. Adjusting it for population size to compare to the US, Australia added 680k jobs. The Yen is rallying to a fresh 15 yr high after Vice Finance Minister Igarashi said they don’t want to play race to the bottom with their currency.

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