Commodity Currencies Slide Amid Rising Risk Aversion

Commodity Currencies Slide Amid Rising Risk Aversion

8 March 2016, 08:34
Roberto Jacobs
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Commodity Currencies Slide Amid Rising Risk Aversion



Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major counterparts in the Asian session on Tuesday amid rising risk aversion, with some of the markets erasing early gains following the release of weak trade data from China. The overnight surge in crude oil and iron ore prices had earlier boosted resources stocks.

Meanwhile, crude oil for April delivery are currently down $0.45 at $37.45 a barrel. Data from the General Administration of Customs showed that China's exports slumped 25.4 percent year-over-year in February, much faster than the 14.5 percent decrease expected by economists. Imports dipped 13.8 percent in February from a year ago, more than the 12 percent drop forecast by economists.

The visible trade surplus of the country came in at $32.59 billion in February, which was below a $51.0 billion surplus expected by economists.

Meanwhile, the NZ dollar began falling after Fonterra cut its forecast payout.

Data from Fonterra Cooperative Group showed that it has cut its forecast payout to dairy farmers to $3.90 per kilogram of milk solids.

In other economic news, data from National Australia Bank showed that business confidence in Australia held firm in February, with an index score of +3. That's unchanged from the January reading.

The index for business conditions climbed to +8 from +5 in the previous month.

Data from Statistics New Zealand showed that total manufacturing sales in New Zealand climbed a seasonally adjusted 1.3 percent on quarter in the fourth quarter of 2015. That follows the downwardly revised 3.3 percent increase in the third quarter.

By value, manufacturing dipped 1.9 percent after rising 4.2 percent in the three months prior.

Monday, the Australian dollar rose against its major rivals. The Australian dollar rose 0.55 percent against the U.S. dollar, 0.09 percent against the yen and 0.29 percent against the euro.

Meanwhile, the Canadian dollar showed mixed trading against its major rivals. When the loonie rose against the U.S. dollar and the euro it held steady against the yen. However, the NZ dollar held steady against its major rivals.

In the Asian trading, the Australian dollar fell to 4-day lows of 1.4863 against the euro and 83.69 against the yen, from yesterday's closing quotes of 1.4745 and 84.69, respectively. If the aussie extends its downtrend, it is likely to find support around 1.53 against the euro and 80.00 against the yen.

Against the U.S., the New Zealand and the Canadian dollars, the aussie edged down to 0.7418, 1.0957 and 0.9885 from yesterday's closing quotes of 0.7468, 1.0975 and 0.9917, respectively. The aussie may test support near 0.72 against the greenback, 1.07 against the kiwi and 0.96 against the loonie.

The NZ dollar fell to 4-day lows of 1.6304 against the euro and 76.30 against the yen, from yesterday's closing quotes of 1.6162 and 77.13, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.67 against the euro and 75.00 against the yen.

Against the U.S. dollar, the kiwi edged down to 0.6761 from yesterday's closing value of 0.6800. On the downside, 0.66 is seen as the next support level for the kiwi.

The Canadian dollar fell to 4-day lows of 1.4708 against the euro and 84.57 against the yen, from yesterday's closing quotes of 1.4627 and 85.39, respectively. If the loonie extends its downtrend, it is likely to find support around 1.52 against the euro and 81.00 against the yen.

Against the U.S. dollar, the loonie edged down to 1.3337 from yesterday's closing value of 1.3281. The loonie may tests support near the 1.37 region. Meanwhile, the safe-haven yen rose against its major rivals amid rising risk aversion.

Data from the Cabinet Office that Japan's revised reading of gross domestic product was down an annualized 1.1 percent on year in the fourth quarter of 2015. That beat forecasts for a decline of 1.6 percent, following last month's preliminary reading that suggested a contraction of 1.4 percent.

On a quarterly basis, GDP dipped 0.3 percent, which also marked an upward revision from 0.4 percent. GDP added 0.3 percent in the three months prior.

Meanwhile, the Bank of Japan said that the total value of overall bank lending in Japan was up 2.2 percent on year in February, coming in at 496.957 trillion yen. That follows the upwardly revised 2.4 percent increase in January.

The Ministry of Finance noted that Japan had a current account surplus of 520.8 billion yen in January, shy of forecasts for a surplus of 700 billion yen, following the 960.7 billion yen surplus in December.

The yen rose to 1-week highs of 112.75 against the U.S. dollar and 113.35 against the Swiss franc, from yesterday's closing quotes of 113.43 and 113.91, respectively. If the yen extends its uptrend, it is likely to find resistance around 111.00 against the greenback and 112.00 against the franc.

Against the euro, the yen advanced to a 4-day high of 124.24 from yesterday's closing value of 124.93. The yen is likely to find resistance around the 122.00 area.

The yen edged up to 160.66 against the pound, from yesterday's closing value of 161.78. On the upside, 155.00 is seen as the next resistance level for the yen. Looking ahead, Swiss unemployment rate for February and German industrial production for January are due to be released in the pre-European session at 1:45 am ET and 2:00 pm ET, respectively.

In the European session, Swiss CPI for February and Eurozone GDP data for the fourth quarter are slated for release.

At 4:15 am ET, Bank of England Governor Mark Carney will testify, along with BOE Deputy Governor Jon Cunliffe, on United Kingdom's European Union membership before the Parliamentary Committee in London.

In the New York session, Canada housing starts for February and building permits for January and U.S. NFIB small business index for February are set to be published.

At 8:00 am ET, IMF First Deputy Managing Director David Lipton is expected to speak at the National Association for Business Economics Annual Economic Policy Conference in Washington D.C.

At 12:00 pm ET, Bank of England MPC Member Martin Weale is expected to speak at the University of Nottingham.

The material has been provided by InstaForex Company - www.instaforex.com
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