Commodity Currencies Slide Amid Risk Aversion

Commodity Currencies Slide Amid Risk Aversion

1 April 2016, 09:26
Roberto Jacobs
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Commodity Currencies Slide Amid 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 Friday amid risk aversion, despite better-than-expected Chinese manufacturing surveys, as investors turned cautious ahead of the release of the closely-watched U.S. monthly jobs data later in the day.

The closely-watched report is expected to show an increase of about 210,000 jobs in March after employment jumped by 242,000 jobs in February. The unemployment rate is expected to hold at 4.9 percent.

Oil prices fell due to oversupply worries. Crude oil for May delivery are currently down $0.56 to $37.78 a barrel.

Standard and Poor's downgrade for the outlook of China to negative from stable also weigh on investor sentiment.

Thursday, the Australian, the New Zealand and the Canadian dollars showed mixed trading against their major rivals. The aussie, kiwi and the loonie rose against the U.S. dollar and the yen. Meanwhile, the aussie and the loonie fell against the euro, the kiwi held steady against the euro.

In the Asian trading, the Australian dollar fell to 85.78 against the yen, from yesterday's closing value of 86.17. The aussie may test support near the 84.00 region.

Against the euro and the U.S. dollar, the aussie dropped to 1.4858 and 0.7651 from early highs of 1.4780 and 0.7700, respectively. If the aussie extends its downtrend, it is likely to find support around 1.52 against the euro and 0.74 against the greenback.

The NZ dollar fell to 2-day lows of 77.29 against the yen, 1.6498 against the euro and 1.1123 against the Australian dollar, from yesterday's closing quotes of 77.72, 1.6463 and 1.1078, respectively. If the kiwi extends its downtrend, it is likely to find support around 75.00 against the yen, 1.68 against the euro and 1.13 against the aussie.

Against the U.S. dollar, the kiwi edged down to 0.6889 from yesterday's closing value of 0.6906. The kiwi is likely to find support around the 0.67 area.

The Canadian dollar fell to more than a 2-week low of 1.4842 against the euro, from yesterday's closing value of 1.4795. On the downside, 1.51 is seen as the next support level for the loonie.

Against the U.S. dollar, the yen and the Australian dollar, the loonie dropped to 2-day lows of 1.3049, 85.91 and 1.0002 from yesterday's closing quotes of 1.3002, 86.54 and 0.9955, respectively. If the loonie extends its downtrend, it is likely to find support around 1.33 against the greenback, 84.00 against the yen and 1.01 against the aussie.

Meanwhile, the safe-have yen rose against its major rivals amid risk aversion.

In economic news, data from Markit Economics showed that Japan's Markit/ Nikkei Manufacturing Purchasing Managers' Index, or PMI, fell to 49.1 in March, in line with the preliminary data, from 50.1 in February.

The yen rose to a 4-day high of 160.64 against the pound and a 2-day high of 112.06 against the U.S. dollar, from yesterday's closing quotes of 161.60 and 112.55, respectively. If the yen extends its uptrend, it is likely to find resistance around 156.00 against the pound and 110.00 against the greenback.

Against the euro and the Swiss franc, the yen edged up to 127.43 and 116.61 from yesterday's closing quotes of 128.07 and 116.98, respectively. The yen is likely to find resistance around 125.00 against the euro and 114.00 against the franc.

Looking ahead, Swiss retail sales data for February, PMI reports from major European economies for March and Eurozone unemployment rate for February are due to be released later in the day.

In the New York session, U.S. jobs data, U.S. ISM manufacturing PMI and Canada RBC manufacturing PMI, for March, U.S. construction spending for February, U.S. University of Michigan's final consumer sentiment index for March and U.S. Baker Hughes rig count data are slated for release.

At 12:00 pm ET, Federal Reserve Bank of Cleveland President Loretta Mester is expected to speak about the economic outlook and monetary policy at the New York Association for Business Economics, in New York.

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

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