After moving in lockstep for the past few days, we saw very divergent price action in the majors over the past 24 hours. Against the US dollar, the New Zealand dollar sold off, the Australian dollar ended the day unchanged while the Canadian dollar raced back towards its 11 month highs.
In Australia, consumer inflation expectations dipped from 18.3 percent to 14.2 percent while average weekly wages grew stronger than expected. Overall, the mostly softer inflation pressures are making it difficult for the AUD/USD to rally. The 2007/2008 Budget unveiled by Finance Minister Cullen of New Zealand was most positive for growth going forward. Starting in April of next year, the corporate rate would be dropped from 33 to 30 percent. The kiwi sold off however as Cullen reminded the markets that he is very unhappy with the level of the currency because it was overvalued and as a result, hurting exports. However this is nothing new since these are the same comments that he has been making for months. Canada continues to report solid economic data with both consumer prices and wholesale sales beating expectations. This suggests that we could see stronger Canadian retail sales tomorrow as well.