The Australian dollar secured further gains over the week with highs close to 0.8700 over the second half of the week which represented an 8-week high for the currency.
Risk tolerances improved over the week with the US Federal Reserve interest rate cut spurring demand for high-yield currencies and substantial gains for the Australian dollar. The Reserve Bank Governor took a generally confident view over the domestic economy which underpinned the currency.
The US rate cut boosted the Australian dollar's yield appeal while strong gains for gold prices also helped support the Australian currency..
Australian yield support will continue in the short-term, but it will be difficult to extend the strong recovery from August's lows.
Canadian dollar
The Canadian currency continued to gain ground against the US dollar and pushed to test parity for the first time since 1976. There was no opposition to currency strength from domestic officials with a Friday peak close to 0.9950 as the 1.00 level broke.
The consumer prices data recorded a 0.3% drop in prices for August while underlying prices rose 0.1% to give a 2.2% annual increase. There was a strong reading for wholesale sales with a 2.0% monthly increase for July.
The local currency drew further support from high oil prices over the week while the strong rise in gold prices also provided important backing.
The Canadian dollar should remain firm in the short-term, but is due for a substantial correction weaker after rapid gains this month.
Indian rupee
The rupee strengthened significantly over the week as the dollar came under pressure The Indian currency pushed to a 9-year high beyond the 40.0 level as the dollar came under wider selling pressure with highs around 39.85.
There were further flows into the local stock market following the US Federal Reserve interest rate cut which boosted rupee demand. The rupee yield spread over US dollar interest rates increased to the highest level for three years which also supported the currency.
There was evidence of central bank intervention to slow the currency's gains, although the bank was cautious over aggressive dollar buying.
Rupee confidence should remain firm in the short-term on optimism over capital inflows, but significant caution is required at current levels.