The Australian, New Zealand and Canadian dollars are sharply higher today.
Even though the moves are respectable, they represent mere retracements within the recent downtrend. Commodity prices are sharply higher with oil hitting a new record high. This has offset the sharp downside surprise in Canadian consumer prices and helped to keep the Canadian dollar steady even though the latest economic data suggests that the BoC could consider lowering interest rates in the near future. This comes on the heels of comments from Bank of Canada Governor Dodge yesterday who said that the risks to global growth have increased and he will take this into account when they meet next month. For the first time in 2 years, Canadian prices are back below the central bank’s target as the prices of gasoline and automobiles declined. Canadian retail sales are out tomorrow. We expect them to be strong given the sharp rise in wholesale sales.