Commodity Currencies Fall As Yuan Slumps Yet Again
12 August 2015 - 3:16PM
RTTF2
Commodity currencies such as the Australian, the New Zealand and
the Canadian dollars continued to be weak against their major
currencies in the Asian session on Wednesday, as the yuan slumped
for the second straight day following Tuesday's devaluation by the
Chinese central bank.
The People's Bank of China on Wednesday set its reference rate
at 6.3306 per dollar, up slightly from Tuesday's close but 1.6
percent lower than the previous day's fixing rate. The central bank
devalued the yuan by 1.9 percent on Tuesday. The devaluation of the
yuan has fueled worries about slowing growth in the world's
second-largest economy.
Meanwhile, commodity prices also fell after China's surprise
move to devalue its currency.
In other economic news, data from Westpac Bank showed that
consumer confidence in Australia jumped sharply in August, as its
index surged a seasonally adjusted 7.8 percent to a score of 99.5.
That follows the 3.2 percent tumble in July to a reading of
92.2.
Also, data from the Australian Bureau of Statistics showed that
wage costs in Australia were up a seasonally adjusted 0.6 percent
on quarter in the second quarter of 2015. That was in line with
expectations and up from the 0.5 percent gain in the first quarter.
On a yearly basis, wage costs were up 2.3 percent, unchanged and in
line with forecasts.
Tuesday, the Australia and the New Zealand dollars fell against
its major rivals. The Australian dollar fell 1.37 percent against
the U.S. dollar, 0.96 percent against the yen and 1.90 percent
against the euro. The NZ dollar also fell 1.07 percent against the
U.S. dollar, 0.58 percent against the yen and 1.42 percent against
the euro.
Meanwhile, the Canadian dollar showed mixed trading against its
major rivals. The loonie rose against the yen but it fell against
the euro. Against the U.S. dollar, the loonie held steady.
In the Asian trading today, the Australian dollar fell to a
6-year low of 0.7214 against the U.S. dollar, from yesterday's
closing value of 0.7305. The aussie may test support near the 0.71
region.
The aussie dropped to 8-day lows of 90.33 against the yen and
1.1127 against the NZ dollar, from yesterday's closing quotes of
91.39 and 1.1165, respectively. If the aussie extends its
downtrend, it is likely to find support around against the
greenback, 89.00 against the yen and 1.10 against the kiwi.
Against the euro and the Canadian dollar, the aussie slipped to
an 8-month low of 1.5286 and nearly a 2-week low of 0.9489 from
yesterday's closing quotes of 1.5113 and 0.9579, respectively. On
the downside, 1.53 against the euro and 0.94 against the loonie are
seen as the next support level for the aussie.
The NZ dollar fell to a 6-year low of 0.6465 against the U.S.
dollar and nearly a 2-year low of 1.7055 against the euro, from
yesterday's closing quotes of 0.6539 and 1.6878, respectively. If
the kiwi extends its downtrend, it is likely to find support around
0.63 against the greenback and 1.71 against the euro.
Against the yen, the kiwi dropped to more than a 3-week low of
80.95 from yesterday's closing value of 81.81. The kiwi may test
support near the 79.00 region.
The members of the Bank of Japan's monetary policy board believe
that the country's economic recovery continues on pace, minutes
from the bank's meeting on July 14 and 15 revealed. At the meeting,
the policy board decided to maintain its target of raising the
monetary base at an annual pace of about JPY 80 trillion.
It also kept its benchmark lending rate on hold at 0.10
percent.
The Canadian dollar fell to a 2-day low of 1.3157 against the
U.S. dollar, from yesterday's closing value of 1.3113. The loonie
may test support near the 1.32 area.
Against the yen and the euro, the loonie dropped to 95.14 and
1.4529 from yesterday's closing quotes of 95.39 and 1.4478,
respectively. If the loonie extends its downtrend, it is likely to
find support around 94.00 against the yen and 1.46 against the
euro.
Looking ahead, U.K. jobless data for July, Swiss ZEW economic
expectation index for August and Eurozone industrial production for
June are due to be released in the European session.
In the New York session, U.S. monthly budget for July is set to
be announced.
At 8:30 am ET, Federal Reserve Bank of New York President
William Dudley is expected to speak before the Rochester Business
Alliance on the local economy and the benefits of workforce
development in Rochester, New York, U.S.
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