After yesterdays sharp slide, the commodity currencies rebounded today with the most meaningful reversal seen in the Canadian dollar. Despite the best levels in business confidence since the fourth quarter of 2004, USD/CAD is flirting with its 7 month lows.
The demand for the CAD has been primarily driven by M&A flows. Norways Statoil agreed to purchase Canadian based North American Oil Sands for $2 billion cash. Looking ahead, the only events on the calendar are the RBA rate decision, monetary policy statement, Canadian GDP, industrial product prices, IVEY PMI and New Zealand building permits, money supply and commodity prices. The RBA is not expected to raise rates, while most Canadian data should print positively.