For the first time in 5 years, the Reserve Bank of New Zealand cut interest rates by 25bp to 8 percent and signaled that rates will be cut even further.

The futures curve is pricing in 5 rate cuts over the next 12 months and this is the first of the five.  The New Zealand economy has been struggling and could be headed for a recession.  The dovish comments from RBNZ Bollard will keep the currency under water for some time.  Meanwhile the Australian and Canadian dollars have failed to rally despite stronger than expected consumer prices.  Their weakness is of course due to the drop in oil and gold prices.  Like the rest of the world, inflation has hit Australia and Canada with food and energy prices on the rise.  There is no more data from any of three commodity producing countries this week, which means that their fluctuations will largely be dependent upon on the fluctuations of commodity prices and the US dollar.