Carry trade liquidation, weaker economic data and softer commodity prices drove the Australian, New Zealand and Canadian dollars lower today. Wholesale sales growth slowed in the month of November which suggests that retail sales numbers for Canada, which are due for release tomorrow could be soft as well.
The Bank of Canada will also be making an interest rate decision. They are expected to lower rates by 25bp tomorrow to 4.00 percent, putting Canadian rates below US rates temporarily. The Canadian economy has really taken a turn for the worst with growth in all sectors of the economy slowing. In Australia, inflationary pressures appear to be easing with producer prices rising only 0.6 percent last month. Although central bank Governor Stevens still believes that inflation will remain uncomfortably high in the near term, the drop in producer prices allows him to postpone any plans to raise interest rates. This flexibility comes in handy in the current environment when a rate hike would only exacerbate the losses in the Australian dollar and Australian stocks.