A broad drop in carry trades along with falling commodity prices weighed heavily on currencies like the Australian dollar, New Zealand dollar, and Canadian dollar.
Meanwhile, the release of Canadian Ivey PMI failed to have a big impact on USD/CAD, despite the stronger-than-expected reading. In fact, Ivey PMI rose to 61.0 from 51.5, though the index had been anticipated to slip to 51.0. The increase suggests that business activity accelerated during the month of September, but the breakdown of the report isn't nearly as encouraging. The employment component actually fell below 50 - signaling contraction - which bodes ill for Friday's national labor numbers. Furthermore, the price component actually rose even though commodities have traded broadly lower in recent months. Overall, Canadian growth may appear to be faring well right now, but given the global slowdown, the export-dependent economy could feel the headwinds in late-2008 and 2009. Looking ahead to the next 24 hours, only the Australian dollar faces significant event risk as the Reserve Bank of Australia will announce their rate decision. According to a Bloomberg News poll of economists, the RBA is expected to cut rates by 50bps to 6.50 percent. This would mark the lowest rate in a year and the second rate cut in a row, as the RBA reduced the cash rate by 25bps on September 2. However, there are two factors to watch here: 1) if the RBA only cuts by 25bps and 2) the Board’s policy statement for some sort of forward-looking bias. Check out our Australian Dollar Forecast for more on the rate decision. Related Articles: Australian Dollar - What Impact Will Tonight's RBA Rate Decision Have?, Canadian Ivey PMI Unexpectedly Improves, Fails to Cool USD/CAD Rally Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.