The Australian dollar tested levels near the 0.91 level against the US currency early in the week and, after a sharp correction, it regained the 0.90 level.
The Australian labour-market data was strong with employment rising by a further 26,800 in December while the unemployment rate fell to 4.1% from 4.3%.
There was weakness in the housing finance data while consumer confidence also weakened. Despite this weakness, markets continued to price in a further interest rate increase. The Reserve Bank continued to warn over inflationary pressure in its latest monetary bulletin, although it did not give a clear signal over rates.
The Australian dollar trends were still correlated with the movements in global stock markets and level of risk aversion.
Yield support will continue to battle for supremacy with international growth fears. The net risks suggest that the Australian dollar is unlikely to make much headway.
Canadian dollar:
The Canadian dollar continued to fluctuate around the parity level during the week as neither the US or local currency were able to sustain an advantage.
The trade surplus fell to CAD2.4bn for December from CAD3.8bn the previous month and this was the lowest figure for nine years as shipments to the US continued to fall. The Bank of Canada suggested that interest rates would be cut again.
The Canadian currency secured some net support from higher commodity prices over the week, although there were still big doubts over the global economy. Moves were influenced significantly by the degrees of risk aversion in the markets.
The Canadian dollar is liable to have a slightly weaker tone given the combination of domestic and international growth fears even if substantial losses are unlikely.
Indian rupee:
The rupee has had a slightly weaker tone, although movements have still been relatively contained with the currency around 39.60 against the dollar on Friday.
Movements in the rupee have again been influenced by shifts in the local stock market. Fears over capital outflows weakened the rupee at times, but the market rallied later in the week
There have been net capital inflows for the month as a whole which limited any selling pressure on the currency, although investors remained cautious.
The rupee was still gaining some support from the increased yield gap over US assets as money-market funds stayed in the local currency.
Fears over the global economy and a more cautious investment stance will continue to expose the rupee to selling pressure, although depreciation should be limited.