I would note that 3 independent events in currencies over the past few days have raised my antennae. First, comments from the Reserve Bank of New Zealand caused a 1% or so spike higher in the NZD. Second, the potential question of the South African FM has caused a 3% plus move weaker in the Rand. Third, the downgrade of a rating's agency outlook of Mexico caused a 1% or spike weaker in the MXN. The same was true of Korea and the KRW a week ago. Granted these currencies are not the most liquid but I think the reactions in both prices and market commentary following them are above normal. Given the compression in volatility cross markets, lack of general fund performance, market participant risk aversion, and upcoming geopolitical and economic events these moves may be a foreshadowing. I recognize that much of this is qualitative and to be tested a bit further.

Jim Sogi writes: 

Here is some anecdotal info on John's NZD post. New Zealand is booming, thriving and growing fast. It's peak ski season and I hear Japanese, Chinese, Italian, French, American, spoken in crowded restaurants and stores. Prices are very high, much higher than exchange rate justifies. Compare the high prices to low prices in Italy and Japan. Real Estate is booming in part due to Chinese purchases. Chinese tourists outnumber all others 10-1 at parks and heli tours. I wonder if now China is exporting inflation after years of exporting deflation with cheap manufacturing. Money seems to be flooding out of China.


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