The concerted global move against the dollar Friday has been underpinned in the most immediate sense by optimism about incipient economic recovery generated by a series of economic data reports from around the world.
These have included strong April industrial production figures out of Japan, positive retail sales figures for the same month from Germany, and revisions to first quarter U.S. gross domestic product estimates to show a moderating pace of economic decline.
Amid this suggestion of global economic regeneration, prices for oil and other key commodities have risen sharply Friday, with crude oil topping the $66 per barrel mark for the first time in over six months and gold and industrial metals prices also substantially higher.
This has accentuated the bid for commodity-linked currencies such as the Australian, New Zealand, and Canadian dollars against the greenback, with all of these units powering to their highest levels since early October 2008.
The Australian dollar poked above the $0.8000 mark against the dollar for the first time since Oct. 1, while the Canadian currency is similarly in eight-month high territory with a move as far as C$1.0941, according to EBS.
Complementing the commodity price rally for these currencies is an ongoing portfolio shift out of the dollar toward more diverse and riskier assets, "as investors look for relatively liquid, 'hard' currency alternatives to the U.S. dollar," said chief currency strategist Shaun Osborne of TD Securities in Toronto.
Jack Spitz, managing director of foreign exchange at National Bank in Toronto, said the greenback also remains dogged by fears that the sacrosanct triple-AAA U.S. credit rating may be in jeopardy from the massive amounts of fresh deficit financing the Treasury is unleashing to combat the recession.
This, he suggested, is leading investors to accelerate their various programs "to diversify reserves from the historical 'dollar trap' to a more trade-weighted euro, pound sterling, and Japanese yen-friendly mix."
Midday Friday, the Australian dollar has moved off its intraday high at $0.8008 to trade at $0.7995, while the Canadian dollar is also off its intraday high and sits at C$1.0958.
The euro is at $1.4129 from $1.3945 late Thursday and Friday's intraday high at $1.4167, while the dollar is at Y95.52 from Y96.96, according to EBS. The euro trades at Y134.98 from Y135.19. The pound is at $1.6154 from $1.5935, while the dollar is at CHF1.0689 from CHF1.0852.
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