The commodity dollars like the Australian dollar, New Zealand dollar, and Canadian dollar all remained weak on Friday thanks to sharp declines in oil and gold prices and a lack of demand for yield.
The Canadian dollar was also hard-hit by economic data, as the Canadian net employment change surprisingly plummeted by 55,200 versus expectations of a gain of 5,000. As I mentioned yesterday, “the employment component of the latest Ivey PMI report fell below 50 for the first time since December, indicating contraction. The last time this happened, the government release of the net employment change was surprisingly weak.” This particular economic indicator is actually one of the most tradable events in the forex markets, as the sentiment reflected in the release tends to have a sharp impact on the Canadian dollar. Looking ahead to next week, Australia faces the release of the RBA’s Quarterly Monetary Policy Statement, NAB Business Confidence, Westpac Consumer Confidence, and the Q2 Wage Cost Index. New Zealand will grapple with Q2 Producer Prices, Business PMI, and Retail Sales. Meanwhile, Canadian data includes Housing Starts, Int’l Merchandise Trade, and Manufacturing Shipments. Given the extent of the recent drop in the commodity dollars, pairs like AUD/USD and NZD/USD could be in for a short-term bounce next week.
