The financial week that ended on Friday 16th June 2017 saw the currencies of Canada, Australia and New Zealand all performing strongly. Of the three the Canadian dollar had the best week, rising after remarks made by senior members of the Bank of Canada which expressed confidence in the country’s continued economic growth in vital areas. Indeed the Bank’s Senior Deputy Governor even hinted at the first reduction in economic stimulation that Canada had experienced in seven years. In contrast to the interest rate hikes advocated in the same week by three members of the Bank of England’s Monetary Policy Committee, this proposal was an indication of underlying confidence in the success of the economy rather than a reaction to higher than expected inflationary figures. The Governor of the bank, speaking later that week, seemed to suggest that in his opinion the rate cuts in effect for the previous seven years had done the required job and now might be the time for an increase. If these suggestions are backed up by strong consumer price and retail sales figures than the Canadian economy may see a rate hike and a result the USD/CAD pair could sink below 1.31.
At the same time that this news was emerging from Canada, the Australian dollar was benefitting from a better than expected report of the country’s labour market and as a result, the AUD achieved its strongest result against the USD for two months. The labour figures were unexpected but can be seen as an indication of another economy that is recovering strongly and in a fashion that brings confidence for the future. The Australian Central Bank met earlier in June and held rates steady while expressing confidence; there was no talk of a rate hike in Australia which would indicate that the healing work of reduced rates in still working its magic, but another period of steady and sustained growth could see the Australian Central Bank making announcements similar to those made by their Canadian counterparts. Whatever the eventual outcome, the week’s announcements saw the AUD climb out of its 0.7520 to 0.7567 trading range. The result may be an outlier of what is to come.
The New Zealand dollar recovered handily from the losses which it had sustained in the wake of its GDP losses after the election results became known. The RBNZ seems unlikely to much change its present cautious policy as the economy is still showing mixed signs; slower activity in housing and decreased job ads set against increased confidence among both businesses and consumers. Again the picture is not as optimistic as Canada’s and nor is it as optimistic as Australia’s, but the underlying confidence among the people who make up the economy should prove a good omen for the future prospects of the New Zealand economy.
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