The Australian, New Zealand and Canadian dollars were hit by US dollar strength, carry trade liquidation and softer commodity prices. Even though we are looking for further appreciation in the commodity currencies over the medium term, today’s move marks a turning point for many of these currencies.
The sell-offs have been strong and if non-farm payrolls are as good as we expect, there could be continuation. There will be better opportunities to buy these currencies once they have stabilized. Economic data from Australia was better than expected; retail sales and manufacturing PMI both increased significantly. The trade deficit however widened, but that should take backseat to the other data. Canadian employment will be released tomorrow. After the sharp rise in September, employment growth is expected to slow.