The Bank of Canada says that in recent weeks, financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly. But it adds that “If the unprecedentedly rapid rise in the Canadian dollar (which reflects a combination of higher commodity prices and generalized weakness in the U.S. currency) proves persistent, it could fully offset these positive factors.”

Global emerging market equity funds absorbed $3.79 billion in week to June 3 vs just over $2 billion in previous week, says fund tracker EPFR Global. Notes investors put more cash in emerging markets, commodities, energy, following broad weakness of safe-haven USD, JPY. Adds higher risk appetite eyed in $22.7 billion being pulled out from money market funds to look for higher yields, also $1.1 billion being pumped into global bond funds – largest weekly inflows since 4Q of 2004. Says U.S., Japan, Europe equity funds had outflows on concerns over weak domestic demand. Notes global emerging market equity funds have taken $26.1 billion net inflows year-to-date vs $50 billion net outflows for whole of 2008

NZD/USD traders today will eye 0.6375/0.6400 area as continued resistance following Wednesday evening’s sharp sell off, says BNZ Bank FX Strategist Danica Hampton. Adds NZD’s fortunes will ultimately mirror those of the major currencies; immediate support on day should be evident on any pullback to the 0.6275-0.6300 level, “though a breach would encourage those looking for a deeper pullback for the currency in the days ahead.” Pair last at 0.6333.