Despite the lack of Canadian economic data today, the demand for the currency was so strong at the onset of European trading that the Canadian dollar hit a new 30 year high against the US dollar. The Bank of Canada is expected to raise interest rates tomorrow to 4.50 percent and the government?s nonchalant stance on the currency?s persistent rise leaves the risk for hawkish comments open.
Although it is difficult to fade CAD strength after seeing the strong employment figures on Friday, the sharp intraday reversal in USD/CAD suggests that bottom pickers are out in force. If the Bank of Canada does so much as hint that this upcoming rate hike will be the last, it will probably be enough to cement a bottom in USD/CAD. For more on the BoC rate decision, see our Canadian dollar special. Housing starts are also due for release tomorrow, but that will take a back seat to the rate decision. Meanwhile the Australian dollar hit a fresh 18 year high today thanks to a sharp rise in gold and copper prices. Unlike the Australian dollar, the New Zealand dollar is really struggling at current levels. Strong two way action at the pair?s 25 year highs indicates that the next breakout will be a big one.