The Australian, New Zealand and Canadian dollars are weaker across the board, as are commodity prices. In fact, the AUD/USD and NZD/USD are the day?s worst performing currency pairs. Even though Australian employment hit 32 year lows last month, last night?s wage growth numbers confirms that the central bank will be in no rush to raise interest rates.
If you recall both producer and consumer prices surprised to the downside earlier this month. Like the UK, the strength of the local currency is helping to reduce inflationary pressures. We see the same in New Zealand as producer prices fell for the second quarter in a row on both an input and output basis. In addition, inputs, which are most sensitive to currency valuations, fell by the largest amount in at least 30 years. Therefore like the rest of the world, the strength of the Canadian dollar should also lower inflationary pressures in Canada. Consumer prices are due for release tomorrow and we are looking forward to weaker numbers. In addition to CPI, wholesale sales is also due for release. We usually use this number as a leading indicator for retail sales, which is due on Friday.