The Canadian dollar climbed to a three-and-a-half-month-high against the U.S. dollar on Tuesday, tracking global equities, commodities and other commodity-driven currencies higher as a stream of encouraging headlines lifted sentiment.
The Australian and New Zealand dollars got a boost after the Reserve Bank of Australia sounded content with policy where it was, while talk of stimulus measures in regional China underpinned risk appetite.
Meanwhile, talk the European Central Bank will take strong action to ease Spanish and Italian borrowing costs was also being telegraphed to markets.
Wednesday’s Canadian retail sales data, comments from Bank of Canada’s Mark Carney when he speaks to the Canadian Auto Workers union and the U.S. Federal Reserve’s FOMC minutes could all be factors in the currency’s direction. Market watchers will look closely for any change in the Canadian central bank’s perceived tightening bias.