The Canadian and New Zealand dollars were the only currency pairs to rally against the US dollar today.
The fact that commodity prices were slightly lower and there was no Canadian data released indicates that the move in USD/CAD is driven by momentum, flow and speculation that tomorrow’s building permits and IVEY PMI will be strong. The Canadian economy has proved to be far more resilient than any of us could expect so it would not be surprising if the manufacturing and housing market reports confirmed this. As for the New Zealand dollar, stronger labor costs in the third quarter gave the currency a good reason to outperform the US and Australian dollars. Unfortunately the Aussie did not participate in this rally; many traders find it hard to believe that the RBA will be raising interest rates later this week. Overall the Australian economy remains strong. Even though service sector PMI was softer last month, job advertisements increased 2.7 percent and the TD securities inflation index ticked higher.