It's trading on the back of the energy sector.
The Australian dollar has moved up against all other currencies quite sharply. The market has been wrong-footed by the Australian dollar, as has happened on several occasions this year. You get a few strong numbers in Australia and the market has to turn around again.
The U.S. dollar might grind a little higher as the United States comes back from a long weekend. But I think it is going to be a quiet week.
Much of this liquidity appears to be coming from China and increasingly Japan where investment trust growth is supplying significant volumes to foreign bonds with little regard to the rising global imbalances that policy makers frequently flag as a risk to the global economy.
The yen has been a definite influence on Asian currencies. Korea definitely has one eye on the yen. I suspect Korea would hope the yen would move more than the won.
A lot of the good news is already priced into the Canadian dollar. It's possible before the year is out that the hurricane season will be over, the Federal Reserve will still be hiking rates, and oil prices will come off, helping take some of the juice out of the Canadian dollar.
Recovering equities and still overall strong commodity markets suggests that there is little broad-based concern that central bank policy tightening will curtail global economic growth and there is still adequate global liquidity chasing higher risk assets and capping risk premiums.
The market has been trading on the hurricane news.
Against that, the market has started thinking about rate hikes in Europe in the first quarter of next year. That is going to prevent a large fall in the euro.
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