The US dollar is extending its recent gains. There does not appear to a new driver. Rather the momentum, without meeting official resistance, is encouraging piling on. Â
Australian and New Zealand central bank officials may have given a bit of a push to their currencies, but their assessment has been consistently articulated. The central banks see their currencies as unreasonably strong. The RBNZ  threatened intervention. The RBA’s push for macro-prudential measures to cool the housing market means that monetary policy (higher rates) will not have to be used. Â
However, the euro is trading at new low, moving beyond our near-term target of $1.2750 target. The next technical objective is about a cent lower, but key psychological level is $1.25. Draghi’s indication that additional unconventional measures can be adopted if necessary is not real news.  This has been the direction of his guidance, and the perceived risk of it has risen since the poor initial participation in the new four year loan facility (TLTRO).  Â
Next week’s flash euro area CPI figure is the key event ahead of the ECB meeting, where details of the ABS/covered bond purchase plans are expected. There is some talk of another decline. The 0.5% monthly increase from last September drops out of the base effect and the ongoing weakness of commodities fuels the pessimism. The policy response to a potential weak report could dominate the  “modalities” of the private sector asset purchases.Â
Eurozone money supply figures provided more fodder for the euro bears.  Money supply growth ticked up to 2.0% from 1.8%.  It is the fastest pace since last September. However, the contraction in loans barely slowed (-1.5% from -1.6%  in July).  Improvement in lending to households stalled at -0.5% year-over-year, while the pace of contraction in lending to non-financial business slowed to -2.2% from -2.4%.  The lending numbers are of increasing importance for estimating the second phase of the TLTRO, which depends more on the expansion of the loan book. Â
