The Australian dollar failed to hold gains above the 0.8440 level against the US dollar and weakened back towards 0.8350 in choppy trading as yield volatility persisted.
There were no major domestic data releases during the week with business and consumer confidence holding firm.
Reserve Bank Governor Stevens stated that inflation was likely to rise over the next few months, but he also stated that the bank had time to monitor the situation given that recent inflation data had been more favourable. Following the remarks, market expectations over another near-term increase in interest rates eased slightly.
The Australian dollar will be vulnerable to a further correction weaker as market volatility is liable to increase, especially if the New Zealand central bank intervenes in the market again.
Canadian dollar
The Canadian dollar was unable to sustain a move beyond 1.06 against the dollar and weakened to near 1.0750. The dominant theme was one of consolidation after recent strong gains with the US dollar unable to sustain levels above the 1.07 level.
There was little in the way of major Canadian economic data over the week with a decline in manufacturing shipments after a surge reported for last month. The Canadian currency fluctuated in line with movements in oil and wider commodity prices.
The Canadian dollar should retain a firm short-term tone on expectations of a July interest rate increase, although consolidation is still likely to dominate.
Indian rupee
The Indian rupee has fluctuated in choppy trading during the week as stock market volatility persisted. From lows around 41.25 at the end of last week, the rupee was unable to regain the 40.50 level and settled close to 40.95 on Friday.
There was initial strength in capital inflows associated with IPO offerings, but these flows eased later in the week Higher US yields helped support the US dollar against the rupee and there was further speculation over central bank intervention which restrained the currency.
The Indian economic data was firm with a 13.6% annual increase in industrial production for April, but fears over rupee over-valuation and deteriorating competitiveness persisted.
The rupee will should be able to resist heavy losses against the dollar unless there is a severe drop in regional stock markets with the central bank helping to cap gains near current levels.