The Canadian, Australian and New Zealand dollars all performed extremely well today on the back of rising commodity prices and resurgence in demand for high yielding currencies.
The Feds move today has restored confidence in the financial markets and confidence translates into risk appetite or renewed demand for commodity currencies. Gold and oil prices are also sharply higher today, which has helped to take the Canadian dollar to a fresh 30 year high. There is no stopping the loonie at this point; parity with the US dollar (which is an exchange rate of 1.0) is so close that a test of that price level seems inevitable. Reserve Bank of Australia Governor Stevens was also on the wires last night downplaying the impact of the US economic slowdown on the Australian economy. Australia stands to benefit significantly from growth in Asia, which is expected to remain solid. Yesterday, the Asian Development bank raised their growth forecasts for Asian economies excluding Japan from 7.3 to 8.3 percent.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com