The big news of what is essentially a quiet start to the forex trading week is the continued ascent of the Canadian dollar to a nine-month high against the U.S. dollar. Investors continue to sense that with so many markets in an advanced state of repair that the reward from holding the currencies of resource-rich nations easily outweighs the risks of a counter-move against them. The Canadian dollar today buys 92.36 and earlier took out a June 1 peak, which was followed by six weeks of nervousness surrounding recovery hopes.

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With September delivery crude oil higher at $68.42 having risen for nine days, and the price of gold remaining solidly above $950 per ounce and an 11-day winning streak for global stocks as measured by the MSCI global stock index, investors are starting to get all fired up over the real deal.

The Aussie dollar still has some work to do to lift the lid on overhead resistance, but not much. It's currently trading at 82.17 U.S. cents today and is firmly in the black.

The dollar and the yen continue to feel the weight from the flipside of returning confidence. All round lower levels of implied options volatility are apparent in both stocks and currencies and that's bolstering appetite for carry trades. Lower volatility benefits the typical carry trade in which a lower yielding yen, for example, is sold to fund a long position in a higher yielding unit such as the Aussie dollar. Because growth is apparently returning the associated implied volatility for safe haven targets such as the yen and dollar is winding down.

However, it's important to note that as we approach the final few days of July, we still note that the dollar, admittedly towards the lower end of the month's range, hasn't yet given way. We take this as a sign that investors are still pretty wary over the prospects for Eurozone growth. Earlier today a Gfk survey of German consumer confidence unexpectedly rallied by more than predicted. The euro currently buys $1.4258 and perhaps buyers are deterred by the knowledge that if the U.S. can only expect a near term post-stimulus rebound to 1% GDP, with 10% unemployment, then what might one expect from a limited stimulus package from a manufacturing-heavy beast like Germany?

In the United Kingdom, real estate agent, Hometrack, announced stable prices evident in eight out of its 10 regions, which has been taken as another sign that the bottom has been reached. No change at this stage is a positive factor and has encouraged sterling buyers to lift the pound against the dollar to $1.6490 to start the week.

The Japanese yen is coming off worst in this environment and the dollar is rallying hard against it. The dollar today buys ¥95.33 for a three week high. The extent of the yen's intervening strength was ¥91.74. The dollar gained after a stronger than expected rise in new home sales, the third in a row and a further sign of a bottom to activity. It's amazing what lower prices will do to spur activity, just when it looked as if supply and demand theories were dead in the water.