The Australian, New Zealand and Canadian dollars were the best performing currencies against the Japanese Yen and US dollars today. Although they still have a long ways to go before recapturing all of the past week?s losses, today?s breakout points to the potential for further gains. Whether or not these currencies will continue to rise will be dependent upon the sustainability of the demand for yield.
As long as no more bad news hits the wires demand could remain steady, but keep an eye out for tomorrow?s US new home sales report. In the meantime, there is no Canadian or Australian data due tomorrow, but New Zealand will be reporting trade balance numbers this evening. The kiwi ended last month only slightly below where it started which means that trade should still be restrained by the high level of the currency. August however is looking very promising for exports since the currency has dropped as much as 18 percent.