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Australian, New Zealand Dollar Recover, Canadian Dollar Continues Lower

Monday, 28 July 2008 20:25:26 GMT

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Written by Kathy Lien, Chief Strategist
The Australian and New Zealand dollars have recovered on mixed economic data and broad dollar weakness.  House prices in Australia rose 4 percent last month after dropping 5 percent the previous month.  The number of new homes sold also rose marginally. Despite this good news, Australian business confidence has dropped to the lowest level in 17 years.  The burden of lower consumer confidence, slower global growth, rising prices and falling equity prices has become too much for the average Australian business to handle.  In contrast, the New Zealand dollar recovered nicely as the trade deficit came out better than expected.  Although the deficit did rise, imports and exports both increased.  Meanwhile the Canadian dollar has fallen for the fifth trading day in a row.  The fear is that the drop in oil prices will bring forward the problems within the Canadian economy.  For a long time, high oil prices have masked a slowdown in export demand.
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