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FXstreet.com (Barcelona) - Australia's yield pickup over Canada is historically low, yet the yields have risen for both in recent weeks, leaving the spread only a little above post-GFC lows. Much has been made of Australia offering reserve managers the highest AAA yield, which remains correct.

However, Canada is also AAA and offers far greater liquidity, with US $855B on issue vs. USD $253B in Australian sovereign debt, a gap, which will widen. Thus, according to the Westpac Analyst team, "The RBA's most likely next move remains a cut, albeit not soon." BoC Gov Carney in contrast this week reiterated the BoC's tightening bias with the 1% benchmark rate very low given steady growth and a solid financial system.

"The relative commodity price story is very mixed pointing overall towards the softening of assets." the Team cites. The Bank of Canada's energy commodity price index has bounced 11% from its late June lows, with help from natural gas, while Australia's WCFI index is up a more modest 9% as base metals continue to struggle, reflecting moderation in China.

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