Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major rivals in the Asian session on Wednesday amid rising risk aversion. Wall Street retreated overnight on fundamental worries. Weak economic data from Japan also added to concerns about a global economic slowdown and dampened investors’ appetite for riskier assets.
Data from the Cabinet Office showed that core machine orders in Japan skidded 3.6 percent on month in July, worth 805.6 billion yen. The headline figure was well shy of forecasts for an increase of 3.3 percent following the 7.9 percent contraction in June. On a yearly basis, core machine orders added 2.8 percent, also missing expectations for a jump of 10.3 percent after surging 16.6 percent in the previous month.
Also, the Bank of Japan said the domestic corporate service prices in Japan were down 3.6 percent on year in August. This was steeper than forecasts for a decline of 3.3 percent following the 3.0 percent contraction in July.
Meanwhile, crude oil prices also fell, as industry data showed a solid build in U.S. crude supplies and the Energy Information Administration cut its crude oil price forecast for the year.
Crude oil for October delivery are currently down $0.36 to $43.79 a barrel.
In other economic news, data from the National Bureau of Statistics showed that the consumer prices in China were up 2.0 percent on year in August. This was faster than the increase of 1.8 percent forecast by economists and was up from 1.6 percent in July. On a monthly basis, consumer prices climbed 0.5 percent versus forecasts for 0.4 percent after gaining 0.3 percent a month earlier.
Producer prices tumbled an annual 5.9 percent versus forecasts for a decline of 5.6 percent following the 5.4 percent contraction in July.
Data from the Australian Bureau of Statistic showed that the unemployment rate in Australia came in at a seasonally adjusted 6.2 percent in August. That was in line with expectations and down from 6.3 percent in the previous month.
Australia gained 17,400 jobs in August to 11,775,800, shattering expectations for an increase of 5,000 following the 37,900 gain in July. Full-time employment increased 11,500 to 8,141,000 and part-time employment increased 5,900 to 3,634,800. Unemployment decreased 14,400 to 781,100.
Data from Statistics New Zealand showed that the overall credit card spending in New Zealand added a seasonally adjusted 0.1 percent on month in August. That follows the downwardly revised 1.0 percent increase in July.
Meanwhile, the NZ dollar was under pressure in the early Asian session after the Reserve Bank of New Zealand lowered its Official Cash Rate by 25 basis points, to 2.75 percent from 3.00 percent. That was in line with expectations and marked the third straight meeting with a rate cut. That followed seven consecutive months with no change.
Wednesday, the commodity currencies such as the Australian, the New Zealand and the Canadian dollars, rose against their major currencies amid risk appetite, as sentiment improved on expectations of further stimulus measures by the Chinese government to boost its slowing economy.
The Australian dollar rose 0.42 percent against the U.S. dollar, 1.26 percent against the yen and 0.01 percent against the euro. The NZ dollar rose 1.08 percent against the U.S. dollar, 2.13 percent against the yen and 0.82 percent against the euro. The Canadian dollar rose 0.37 percent against the U.S. dollar, 1.27 percent against the yen and 0.41 percent against the euro.
In Asian trading, the Australian dollar fell to more than a 2-week low of 1.6176 against the euro, from yesterday’s closing value of 1.5961. The aussie may now test support near the 1.66 region.
Against the U.S. dollar, the yen and the Canadian dollar, the aussie dropped to 2-day lows of 0.6946, 83.34 and 0.9222 from yesterday’s closing quotes of 0.7013, 84.50 and 0.9301, respectively. If the aussie extends its downtrend, it is likely to find support around 0.68 against the greenback, 81.00 against the yen and 0.91 against the loonie.
The NZ dollar fell to more than a 2-week low of 1.7966 against the euro, from yesterday’s closing value of 1.7503. The kiwi may test support near the 1.66 region.
Against the U.S. dollar, the yen and the Australian dollar, the kiwi dropped to a 3-day low of 0.6256, a 2-day low of 75.11 and a 9-day low of 1.1153 from yesterday’s closing quotes of 0.6383, 77.02 and 1.0949, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.61 against the greenback, 72.00 against the yen and 1.12 against the aussie.
The Canadian dollar fell to an 8-day low of 1.4937 against the euro, from yesterday’s closing value of 1.4856. The loonie may test support near the 1.55 region.
Against the U.S. dollar and the yen, the loonie dropped to 2-day lows of 1.3288 and 90.35 from yesterday’s closing quotes of 1.3257 and 90.86, respectively. If the loonie extends its downtrend, it is likely to find support around 1.34 against the greenback and 87.00 against the yen.
Looking ahead, the Bank of England will announce its interest rate decision at 7:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.50 percent and asset purchase target at GBP 375 billion.
At the same time, European Central Bank Executive Board member Peter Praet is expected to give keynote speech at Pension Funds Conference in Bussum, Netherlands.
In the New York session, Canada new housing price index for July, U.S. import price index for August, weekly jobless claims for the week ended September 5, wholesale trade sales data for July and U.S. crude Oil inventories data are slated for release.
The material has been provided by InstaForex Company – www.instaforex.com