On the back of strong economic data, the Australian dollar gained ground against the greenback, taking the New Zealand dollar up with it.
Australia’s PPI figures came in much hotter than expected, as it grew at the fastest pace in almost a decade. This phenomenal increase, attributed to the recent global rise in commodity prices, has resulted in increasing speculation of a rise in CPI figures expected to release midweek, as consumers bear the brunt of rising input prices. This could be a cause of concern for the RBA, as hiking interest rate in the future to deal with inflation is not a viable option, but rise in inflation could delay any notion of slashing rates in the near future. On the other hand, New Zealand’s Visitors Arrival figures, reported in the negative territory, implying that the once robust economy is set to face a slowdown, thus raising speculations that RBNZ would have to cut interest rates to deal with the situation. Canada reported their International Securities Transactions figures which rose at the fastest pace since 2007. This along with record oil prices drove the Canadian dollar higher despite the possibility of a 50bp rate by the Bank of Canada tomorrow. Spillover effects from the US economy have analysts calling for a back to back half point rate cut.