The Australian, New Zealand and Canadian dollars all gained strength against the greenback today amidst higher commodity prices - particularly oil. In fact, crude rocketed during the US trading session to hit a new high of $122.73/bbl and settled at a record of $121.84/bbl. The gains only helped fuel the Loonie’s rally, which was initiated by the better-than-expected Ivey PMI release, as the index eased less than forecasted to 57.6 from 59.0.
Indeed, the gauge is safely in expansionary territory above 50. Furthermore, a breakdown of the report shows that the employment component rose to a five-month high, which bodes well for this Friday’s Canadian labor market releases. On the other hand, the remaining data reflected a sharp jump in prices, a rise in inventories and a new four-year low in supplier deliveries. Meanwhile, the Reserve Bank of Australia left rates steady at 7.25 percent last night and RBA Governor Glenn Stevens noted in his monetary policy statement that domestic demand had started to cool, which lessens upside inflation risks. On the other hand, Stevens also said that “(t)he rise in Australia’s terms of trade currently occurring…will add substantially to national income and ability to spend, even with the slowing in global growth to below trend pace that the Bank has been assuming for some months now.” As a result, the RBA still maintains a hawkish bias, though they are widely expected to leave rates unchanged for the rest of the year.