The commodity currencies such as the Australia, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Wednesday amid risk aversion, as resource stocks were hit by the decline in commodity prices overnight on worries about the volatility in China’s stock market.
Investors fear China’s steep selloff in stock market affects broader economic weakness. Meanwhile, concerns over Greece continued to weigh on investor sentiment.
Following the emergency euro zone summit in Brussels, European leaders on Tuesday gave debt-stricken Greece a final deadline of Sunday to reach a new bailout deal and avoid Greece’s exit from the euro zone.
The crude oil prices also fell, as investors kept a close watch on the Iran nuclear agreement with talks reportedly extended until Friday. Crude oil for August delivery are currently down $0.23 to $52.10 a barrel.
The commodity currencies have been trading lower in recent sessions amid deepening Greek crisis. Since July 1, the Australian dollar has lost 3.70 percent against the U.S. dollar, 3.88 percent against the yen and 2.46 percent against the euro.
Tuesday, the NZ dollar fell 0.58 percent against the U.S. dollar, 0.59 percent against the yen and 0.30 percent against the euro. Meanwhile, the Canadian dollar also fell 0.91 percent against the U.S. dollar, 0.44 percent against the yen and 0.07 percent against the euro.
In the Asian trading today, the Australian dollar fell to a 6-year low of 0.7389 against the U.S. dollar, nearly a 3-1/2-month low of 90.22 against the yen and nearly a 5-1/2-month low of 1.4850 against the euro from yesterday’s closing quotes of 0.7450, 91.29 and 1.4773, respectively.
If the aussie extends its downtrend, it is likely to find support around 0.72 against the greenback, 89.00 against the yen and 1.50 against the euro.
Against the Canadian dollar, the aussie dropped to a 2-day low of 0.9424 from yesterday’s closing value of 0.9462. On the downside, 0.92 is seen as the next support level for the aussie.
The aussie edged down to 1.1154 against the NZ dollar, from yesterday’s closing value of 1.1198. The aussie may test support near the 1.09 region.
The NZ dollar fell to nearly a 2-year low of 80.82 against the yen, from yesterday’s closing value of 81.44. The kiwi may test support near the 79.00 region.
Against the U.S. dollar and the euro, the kiwi edged down to 0.6621 and 1.6572 from yesterday’s closing value of 0.6645 and 1.6546, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.64 against the greenback and 1.66 against the euro.
The Canadian dollar fell to nearly a 3-month low of 95.65 against the yen, from yesterday’s closing value of 96.43. On the downside, 93.00 is seen as the next support level for the loonie.
Against the U.S. dollar and the euro, the loonie edged down to 1.2751 and 1.4008 from yesterday’s closing quotes of 1.2704 and 1.3986, respectively. If the loonie extends its downtrend, it is likely to find support around 1.29 against the greenback and 1.43 against the euro.
Meanwhile, the Japanese yen strengthened against its major rivals, as sharp drop in Chinese stocks and continued worries about the Greek debt crisis, prompted investors to seek the safe-haven currency. Data showing that Japan logged a better-than-expected current account surplus in the month of May failed to boost sentiment.
Data from the Ministry of Finance said that Japan posted a current account surplus of 1.880 trillion yen in May, surging 266.7 percent on year. The headline figure topped expectations for a surplus of 1.570 trillion yen following the 1.326 trillion yen surplus in April.
The trade balance reflected a deficit of 47.3 billion yen – also beating forecasts for a shortfall of 283.8 billion yen following the 146.2 billion yen shortfall in the previous month.
The Bank of Japan said that overall bank lending in Japan was up 2.5 percent on year in June, coming in at 487.773 trillion yen. That was in line with expectations, and down from the 2.6 percent increase in May.
In the Asian trading now, the yen rose to a 2-day high of 121.96 against the U.S. dollar, from yesterday’s closing value of 122.51. The yen may test resistance near the 120.00 region.
The yen climbed to 133.94 against the euro, 188.25 against the pound and 128.78 against the Swiss franc, from yesterday’s closing quotes of 134.88, 189.36 and 129.30, respectively. If the yen extends its uptrend, it is likely to find resistance around 120.00 against the greenback, 130.00 against the euro, 185.00 against the pound and 125.00 against the franc.
Looking ahead, Japan economy watchers sentiment index for June is due to be released at 1:00 am ET.
In the New York session, Canada building approvals for May and U.S. consumer credit for May and crude oil inventories data are set to be published.
At 7:30 am ET, U.K. Finance Minister George Osborne presents 2015 post-election budget.
At 2:00 pm ET, Federal Open Market Committee will release the minutes of June policy meeting. At the same time, Federal Reserve Bank of San Francisco President John Williams is expected to speak about the economic outlook at the International Conference of Commercial Bank Economists, in Los Angeles.
The material has been provided by InstaForex Company – www.instaforex.com