Australian, New Zealand and Canadian Dollars Extend Losses
The Australian labor market remains strong, but that has not helped to shield the Australian dollar from a sharp rise in risk aversion.
20k new jobs were created last month, driving the unemployment rate down to 4.3 percent, which is just shy of the 33 year low of 4.2 percent reported in September. New Zealand consumer prices were also stronger than expected, remaining well above the central bank’s 3 percent target. Retail sales were hot, having risen 2.0 percent in the month of November, which was the strongest pace of growth since February. Economic data from both countries still favor tight monetary policy which is why we think that once the stock market stabilizes, the Australian and New Zealand dollars will be the first to rally. The outlook for Canada on the other hand is very different. Foreign purchases of Canadian securities fell for the seventh month in a row, supporting more weakness in the Canadian dollar.