The Australian dollar pushed to highs above 0.9050 against the US dollar before dipping sharply to 0.8820 as credit-related fears increased again.
A renewed increase in risk aversion triggered a reduction in Australian dollar buying from Japanese investors
Commodity prices held generally firm and this provided Australian dollar support
There was little in the way of domestic data. The announcement of November Federal elections dampened speculation over an interest rate increase next month.
Despite strong yield support, the Australian dollar will be vulnerable to a deeper correction if risk aversion remains at elevated levels.
Canadian dollar
The Canadian dollar resisted pressure for a correction against the US currency, but was unable to make much headway and weakened against the Euro.
The Bank of Canada left interest rates on hold at 4.50% following the latest monetary policy meeting.
The bank's statement had a very slight easing bias as concerns over a tightening of domestic conditions was offset by concerns over currency strength. The monetary policy report confirmed expectations of stable interest rates in the short-term.
The Canadian dollar drew significant support from record oil prices, although there were also fears over a slowdown in growth which curbed the beneficial impact.
There will still be pressure for an underlying correction weaker after recent rapid gains, especially if credit-related fears return.
Indian rupee
The rupee was generally strong early in the week, but volatility then increased sharply. The stock market regulator proposed that there should be curbs on foreign investment which triggered a very sharp correction in the stock market. There was also a sharp retreat in the rupee to near 40.0 against the dollar.
The rupee regained composure late in the week as the stock market attempted to stabilise. The rupee was close to 39.80 on Friday with the currency hampered by underlying global risk aversion.
The importance of capital account trends was illustrated by net inflows of around US$4.6bn for October and any reversal would weaken the rupee sharply. The rupee gained some support from general strength in Asian currencies.
Rupee volatility levels are liable to remain higher in the short-term with the risk of a further correction weaker even if underlying confidence remains firm.