The New Zealand, Australian and Canadian dollars are the day?s biggest market movers. All three of the commodity currencies are down sharply due to the combination of weaker economic data and continued flight to safety out of high yielding currencies back into the greenback.
The big surprise was in New Zealand, where retail sales dropped for the second month in a row. Consumer spending is the backbone of any economy which makes the recent weakness extremely important. There are reports that over $3 billion of New Zealand bonds are set to mature this month. Most New Zealand bonds are owned by foreigners which suggest that the losses in the kiwi could exacerbate when the bond investors repatriate their funds. Australian business confidence was also weaker than expected in the month of July. Australian companies are also being hit by the subprime debacle with Rams Home Loans Group warning that profits would be weaker. Meanwhile over in Canada, the combination of a weaker trade balance and news that Coventree, the largest non-bank issuer of commercial paper in Canada was forced to seek emergency funding when it failed to refinance debt that matured yesterday.