Australian and New Zealand Dollars Rise but Canadian Dollar Continues to Slip
The Australian and New Zealand dollars rallied off of stronger economic data and steady commodity prices. Thanks to a healthy labor market, consumer spending increased by 0.8 percent in the month of November.
This highlights the overall health of the Australian economy and gives the Reserve Bank of Australia more reason to raise interest rates in 2008. We expect the strength in the Australian dollar to continue on the back of tonight’s trade balance numbers. Export orders jumped in the month of November, pointing to a strong release. The Canadian dollar on the hand continued to suffer following weak housing starts. Since the end of 2007, the divergence between Australian and Canadian economic data has helped the AUD/CAD rally over 300 pips.