The Australian currency has continued to challenge 18-year highs against the dollar and has probed resistance levels above the 0.88 level late in the week.
The Australian dollar drew further support from the strength of commodity prices during the week with metals prices at a six-week high.
There was little in the way of economic data, but Reserve Bank Governor Stevens stated that he was not surprised over currency strength given the improvement in the terms of trade
The Australian currency will look to gain from expectations of firm growth and high commodity prices, but will be increasingly vulnerable to a correction given the recent strong gains.
Canadian dollar
The Canadian dollar has continued to find support on retreats against the US currency and briefly challenged the 1.04 level. The overall speculative positioning bias remains heavily against the Canadian dollar and US dollar rallies have been sold into given the positioning bias.
The inflation data was weaker than expected as consumer prices fell 0.2% in June while core prices were unchanged which held the annual increase to 2.5%. The Canadian dollar was again supported by the strength of oil prices during the week
There was little in the way of major releases on the economy, but manufacturing shipments fell for the second month running.
Canadian dollar sentiment is likely to remain strong in the short-term, although consolidation of recent gains is likely to be the dominant theme.
Indian rupee
The rupee has continued to test 9-year highs against the US dollar, underpinned by firm local sentiment and fragile US currency sentiment. The Indian currency was testing levels close to 40.30 on Friday.
The rupee has again been supported by strong capital inflows with international flows into the Indian stock market estimated at US$3.1bn during July. The stock market has pushed to a succession of record highs during the week.
There has been further evidence of central bank intervention to stem rupee gains. The rupee was also unsettled slightly by the very high level of oil prices.
The rupee will continue to gain short-term support from capital inflows and firm regional currencies. The central bank will deter appreciation and sentiment could still switch sharply within the next few weeks.