Canadian, Australian, New Zealand Dollars All Face Sharp Losses

The selloff was primarily due to equity market weakness and rising risk aversion. The Canadian dollar was the worst hit as a sharp rise in wholesale sales failed to offset the fifth monthly decline in foreign investment.  Comments from Bank of Canada Governor Dodge this weekend also pressured the loonie.  He said that risks to global growth have increased over the past month and he will take this into account when they meet to decide interest rates next month.  To some traders, these comments suggest that an interest rate cut may be likely.  We will need to see CPI tomorrow to be sure that the strong Canadian dollar has kept inflation under control.

Written By Kathy Lien, Chief Currency Strategist for DailyFx.com