The biggest beneficiaries of US dollar weakness today are the commodity currencies. The Australian dollar rose to a 23 year high and the Canadian dollar hit a 50 year high! Oil and gold prices are both higher while Canadian GDP was stronger than expected. We once again reiterate that no trend in the currency is as strong now as the downtrend in USD/CAD.
With 95 cents behind us, the next logical target is 90 cents and $100 oil is exactly what will take us there. In after hours trading, crude oil futures surged above $95 a barrel. There is no reason to fade this move. Meanwhile, the Australian dollar will be in play tonight with PMI, retail sales and the trade balance due for release. We are looking for stronger spending and a narrower trade balance thanks to low unemployment and a strong currency. This coincides with our view that the Australian dollar will be the next currency to reach parity with the US dollar.