Australian and Canadian Dollars Climb to Fresh Multi Decade Highs (page 2 of 2)

The only meaningful economic data from Canada next week is the trade balance. Although there was no economic data from New Zealand overnight, the currency also rallied on general optimism towards high yielding currencies. New Zealand retail sales are the only piece of data due out next week.

Euro: Sharp Intraday Reversal Opens Door for Move Back to Record Highs

Having hit a low of 1.4033 intraday, the reversal in the EUR/USD was impressive. Although the price action may be largely due to the reasons listed in our USD Commentary, ECB President Trichet's refusal to acknowledge the burden that a strong Euro is having on the region's economy is still giving traders the green light to go long Euros. Exporters and politicians are already screaming and we believe that it is only a matter of time before the ECB buckles as well. What they need is more confirmation that the economy is weakening and we may get a bit of that in next week's economic reports. Germany, France and Italy are all releasing industrial production numbers and we are expecting German factory orders. There are also no less than eight ECB officials scheduled to speak which could provide some interesting fodder for trading.

British Pound Extends Gains Ahead of Busy Data Week

Despite warnings from HSBC that "hot money" could be exiting the UK in the coming months as growth slows and funds lose confidence in the country's economic management, the British pound continues to rise. There are a lot of UK economic data due out next week including producer prices, industrial production, retail sales and the trade balance. The market will be looking to these numbers for more clarity on whether the Bank of England will be lowering interest rates this year. Bank of England Governor King is also scheduled to speak on Monday. If he remains hawkish, the GBP/USD could take out 2.05.

Carry Trades Rally as Dow Hits New Record High Intraday

Japanese Yen crosses have performed extremely well with the Dow hitting a new record high on an intraday basis. The stronger US number has helped to alleviate some concerns that the US economy could fall into a recession and now that the risk is eradicated for the time being, traders are a bit more willing to take on risk. On Wednesday, the Bank of Japan begins their 2 day interest rate meeting. Rates are not expected to be changed, which should make the announcement a non-event. Japanese markets are closed Monday.