The Australian and Canadian dollars surged to fresh multi decade highs on the back of stronger gold and oil prices and better than expected economic data.
Like Canada, Australia’s labor market is hot. Even though the number of employed individuals increased less than expected, the unemployment rate fell to 4.2 percent, a new 32 year low. Such tight conditions in the labor market is expected to drive wages higher, giving the Reserve Bank of Australia even better reason to consider raising interest rates. The Canadian trade balance was also stronger than expected, helping to offset the drop in the new housing price index. Tonight, the New Zealand dollar will be in play with retail sales due for release. Consumer spending is expected to rebound after dropping 0.2 the prior month.
Written by Kathy Lien, Chief Currency Strategist for DailyFX.com