The Australian, New Zealand, Canadian dollars have strengthened against the greenback despite a drop in gold and oil prices.
The rally in the Dow today and the move lower in the US dollar against everything except for the Japanese Yen indicates that the price action of the commodity currencies is primarily a reflection of the market’s risk appetite. Despite the Reserve Bank of Australia’s recent hawkishness, home loans fell to the lowest level in 3 years while business confidence dropped from -4 to -8. Canadian housing starts were right in line with expectations, rising by 0.2 percent in March. There will be no major data from any of the commodity producing countries until Wednesday when New Zealand retail sales will be released. This means that risk appetite and commodity prices will continue to drive the price action of these three currencies.