Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Monday, as investor sentiment deteriorated after data showed that Chinese factory activity contracted for a tenth straight month in December and on news of escalating geopolitical tensions in the Middle East.
The latest survey from Caixin revealed that China’s manufacturing sector continued to contract in December and at a faster rate, with a PMI score of 48.2. That was well shy of forecasts for 48.9 and down from 48.6 in November.
Saudi Arabia announced that it would cut diplomatic ties with Iran following an attack by protesters on its embassy in Tehran.
In other economic news, the latest survey from the Australian Industry Group said that the manufacturing sector in Australia continued to expand in December, albeit at a slower pace, with a Performance of Manufacturing Index score of 51.9. That’s down from 52.5 in November, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.
Last Thursday, the Australian dollar rose 0.32 percent against the U.S. dollar, 0.26 percent against the yen and 0.75 percent against the euro.
Meanwhile, the New Zealand and the Canadian dollars showed mixed trading against their major rivals. The kiwi and the loonie rose against the euro and held steady against the U.S. dollar. Against the yen, the kiwi fell and the loonie held steady.
In the Asian trading, the Australian dollar fell to more than a 2-week low of 86.30 against the yen, from Thursday’s closing value of 88.03. The aussie may test support near the 85.50 region.
The aussie dropped to a 6-day low of 1.5072 against the euro, from an early 4-week high of 1.4870. On the downside, 1.53 is seen as the next support level for the euro.
Against the U.S. and the Canadian dollars, the aussie slipped to near 2-week lows of 0.7208 and 1.0022 from last week’s closing quotes of 0.7314 and 1.0074, respectively. If the aussie extends its downtrend, it is likely to find support around 0.71 against the greenback and 0.99 against the loonie.
The NZ dollar fell to a 2-week low of 0.6754 against the U.S. dollar, from Thursday’s closing value of 0.6843. The kiwi is likely to find support around the 0.66 area.
Against the yen, the Australian dollar and the euro, the kiwi dropped to nearly a 4-week low of 80.86, nearly a 3-week low of 1.0708 and nearly a 2-week low of 1.6105 from last week’s closing quotes of 82.03, 1.0662 and 1.5904, respectively. If the kiwi extends its downtrend, it is likely to find support around 79.00 against the yen, 1.08 against the aussie and 1.64 against the euro.
The Canadian dollar fell to a 3-year low of 85.99 against the yen and a 5-day low of 1.3918 against the U.S. dollar, from an early 5-day high of 86.99 and nearly a 3-week high of 1.3813, respectively. If the loonie extends its downtrend, it is likely to find support around 85.00 against the yen and 1.40 against the greenback.
Against the euro, the loonie edged down to 1.5015 from Thursday’s closing value of 1.5023. The loonie may test support near the 1.53 region.
Meanwhile, safe-haven yen rose against the other major currencies amid risk aversion.
In other economic news, data from Nikkei showed that the manufacturing sector in Japan expanded with a PMI score of 52.6 in December. That’s up from the preliminary reading of 52.5, and unchanged from the November reading.
The yen rose to nearly a 9-month high of 176.01 against the pound and more than a 2-month high of 119.50 against the U.S. dollar, from Thursday’s closing quotes of 178.46 and 120.19, respectively. If the yen extends its uptrend, it is likely to find resistance around 175.00 against the pound and 118.50 against the greenback.
Against the euro and the Swiss franc, the yen advanced to nearly 5-week highs of 129.99 and 119.65 from last week’s closing quotes of 130.56 and 120.91, respectively. The yen is likely to find resistance around 128.00 against the euro and 118.00 against the franc.
Looking ahead, final manufacturing PMI reports from major European economies for December and U.K. mortgage approvals and money supply data, both for November, are due to be released later in the day.
In the New York session, preliminary German CPI for December, Canada, U.S. manufacturing PMI reports for December and U.S. construction spending for November are slated for release.
The material has been provided by InstaForex Company – www.instaforex.com