And as investors return to riskier assets, analysts are highlighting a currency from the north and one from Down Under. Both are attractive, but for different reasons. The Australian dollar holds an edge in the short term because of current interest rates, while the Canadian dollar.
Also called the Loonie after a Canadian bird -- may be better positioned in the long run to take advantage of a return-to-growth scenario.Both are supported by economies and fiscal positions which are fundamentally strong, but vacillating sentiment on the health of the world economy has caused them to swing in and out of favour.
In May, the currencies of nearly all commodity-exporting countries fell as investors feared the dubious state of the global recovery would undercut demand for their products.
With optimism rising once again about a global rebound, analysts are beginning to weigh the merits of the various growth-sensitive currencies.
A key factor is where the Australian and Canadian dollars stand in the monetary-tightening cycle.
The Bank of Canada last week raised its overnight lending rate 25 basis points to 0.50 per cent, becoming the first central bank in the Group of Seven industrial nations to raise rates since the onset of the global economic crisis.
The Reserve Bank of Australia, however, paused in its cycle, leaving its cash rate target at 4.50 per cent amid evidence that some sectors of the economy have recently cooled. The central bank of Australia, not a G7 institution, has raised rates six times since October 2009.
The Australian dollar, therefore, has an overnight interest rate that far exceeds "anything else that you can get from any G10 country," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York.
"That's the key positive for the Australian dollar," said Mr Bennenbroek. "Regardless of what happens from here, those interest rates are still 4.5 per cent."
It remains unclear how the Bank of Canada will proceed in the interest-rate cycle. The bank last week wound back expectations of future increases somewhat, with an accompanying statement that said further rate increases will depend on domestic and global economic conditions.
But interest-rate differentials are only part of the story.
"There is a very strong Canadian growth story," said Jessica Hoversen, fixed-income and foreign-exchange analyst at MF Global in Chicago.
It is widely accepted that the US economic recovery is outpacing that of the European Union.
Canada, the top trading partner of the US, benefits from that expansion.
Australia also wins from growth but, because of its location, it's more tied to expansion in China.
The Australian dollar rose sharply against the US currency yesterday and in the New York session today in the wake of strong domestic jobs data and Chinese statistics that indicated a 48.5 per cent jump in exports in May from a year earlier, well above expectations.
But doubts persist about the sustainability of China's export miracle and analysts aren't confident about Chinese domestic demand.
Furthermore, if fundamentals in Europe slow down, due to weaker domestic consumption fuelled by retrenchments in government spending, it will affect imports from China, said Ms Hoversen. Those trade flows could have a noteworthy impact on the Chinese growth trajectory, which could have ripple effects for Australia, she said.
"I don't think Canada is as exposed," Ms Hoversen said.
For both countries, time is of the essence.
The outlook becomes more challenging next year, Wells Fargo noted, as the Federal Reserve and the European Central Bank start to raise their interest rates.
