The Australian dollar maintained a firm tone against the US currency during the week, but found it difficult to make strong headway with selling pressure above 0.8650 against the US currency.
Retail sales fell 1.0% for August compared with expectations of a significant monthly increase while there was also a decline in mortgages for the month. The data created fresh doubts over the scope for Reserve Bank tightening and was a negative factor for the Australian dollar.
There was also a sharper than expected fall in employment for August, although the unemployment rate was slightly lower than expected at 5.8%. The construction PMI index improved for September, but was still substantially below the 50 level.
The Australian dollar is likely to be near a peak level even though near-term corrective reversals will be limited and will attract firm buying support.
Canadian dollar:
The Canadian dollar maintained a generally firm tone against the US dollar over the week, but there was resistance on gains towards the 1.07 level.
The Bank of Canada left interest rates on hold at 0.25% following the latest council meeting. The central bank again warned over the potential negative impact on the economy of a strong currency, but there was little evidence that the bank was preparing to be more aggressive on blocking currency gains.
The trade account recorded a CAD1.4bn trade deficit for July, maintaining a poor run of data. Trends in risk appetite and commodity prices tended to have a bigger impact and provided net underlying support to the local currency as there was increased confidence in the global economy.
The Canadian dollar should prove to be generally resilient in the short-term even if further advances are limited.
Indian rupee:
The rupee maintained a generally firm tone against the US currency and strengthened to highs around 48.30 before correcting slightly weaker. The Indian currency was underpinned by a generally weaker US currency trend over the week while risk appetite was generally firmer.
The local bourse advanced to a 15-month high which underpinned sentiment and net capital inflows have improved over the past few weeks.
The rupee will continue to gain support when global risk appetite improves, especially if the US dollar remains under pressure. Nevertheless, the net risks suggest that the currency will find it difficult to make much headway. |