New Zealand Raises...U.K. Does Nothing...

New Zealend raised its benchmark rate 25 basis points to 6.75%. This was not a total surprise, but rather the comments afterward were clearly more bearish then the market anticipated. This morning the U.K. kept rates steady at 4.75%. The market has had a muted reaction so far. Short Sterling has ticked slightly higher and the pound has dropped marginally.

The big news of the morning came out of Japan where it was stated that Japan was going to start moving reserves out of dollars. I think this is big news. Japan is the largest buyer of dollars and dollar debt in the world. This will continue to put steady pressure on the dollar. Best bet be short dollars perferrable against higher yielding currencies.