Over the past few weeks, it has becoming increasing clear which countries and their currencies are headed down the gutter:

The 3 currencies that I am most bearish for the near term are (in order of bearishness).

1. New Zealand Dollar - Targeting 70 Cents

The Reserve Bank of New Zealand cut interest rates last night for the first time in 5 years. With retail sales falling by the most in 4 years and consumer confidence hitting record lows, the New Zealand dollar has weakened to the lowest level in 6 months. With RBNZ Governor Bollard promising more rate cuts and the futures curve pricing such action, the New Zealand central bank has become the most aggressively dovish policy maker of the G10. As a result, I expect significant weakness in the NZD and for it to fall below 70 cents against the US dollar in the near future. Also look for AUD/NZD to hit new highs.

2. British Pound - Pace of Deterioration Will Increase

UK retail sales dropped by the largest amount in 22 years last month. Despite the hawkish tone of the Bank of England minutes, there is no way that the BoE will risk raising interest rates in the near future. Furthermore, the pace of deterioration in the UK economy will only accelerate, pushing the BoE closer and closer to a rate cut, especially if oil prices remain at current levels.

3. Euro - Stubborn Comments to Haunt the Euro

German business confidence, investor confidence and consumer confidence have fallen significantly. The manufacturing sector is beginning to crumble under the weight of the slower global growth, high interest rates and the strong Euro. The ECB is stubbornly hawkish, but expect this stance to come back and haunt them.