Canadian Dollar, Australian Dollar Weaken on Plunge in Oil, Gold

The Canadian and Australian dollars gave up some of their recent gains as oil and gold prices pulled back sharply, with crude futures finishing the day down 2.5 percent below $129/bbl while gold futures fell 1.9 percent to $907.70/oz.

However, the declines were rather subdued as we saw a market-wide return to risk and carry trades, as evidenced by gains in the DJIA and declines in Treasuries. For what it’s worth, the commodity dollar pairs, including USD/CAD, AUD/USD, and NZD/USD continue to simply consolidate the extreme moves we saw over the course of early May. As a result, there is still potential for breakouts and reversals across the commodity dollars, but with little in the way of event risk in coming days, the consolidation may persist.