The Australian, New Zealand and Canadian dollars were the strongest currencies of the day thanks the combination of higher commodity prices and the resurgence in demand for carry trades.
New Zealand economic data also surprised to the upside with the first quarter current account balance narrower than expected, consumer confidence accelerating and building prices rising strongly. Money supply growth slowed slightly, but that did not stop Finance Minister Cullen from warning that the “economy is growing unsustainably fast” and “growing demand and incomes have created inflationary pressures.” Even though Cullen is not the head of the central bank (Bollard is), New Zealand government officials are clearly aligned when it comes to monetary policy outlook. Higher inflation and faster growth can only mean one thing, which is more rate hikes. New Zealand and Canada both have GDP due for release in the next 24 hours, so expect more active trading.