Commodity Currencies Fall Amid Oil Prices Decline
27 July 2016 - 12:27PM
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Commodity currencies such as the Australian, the New Zealand and
the Canadian dollar weakened against their major rivals, as crude
oil prices fell amid lingering concerns that supplies are outpacing
demand.
Crude oil for September delivery are currently down $0.06 to
$42.86 a barrel.
Traders ignored a prediction from BP's CEO that oil prices will
recover by end end-2016 or early 2017.
However, data from the American Petroleum Institute showed a
827,000-barrel decrease in crude supplies last week, compared to
analysts' expectations for a drawdown of 2.3 million barrels.
Meanwhile, the U.S. Department of Energy will publish its U.S.
crude stockpiles report later in the day.
Traders were hesitant to take positions ahead of U.S. Federal
Reserve interest rate announcement, due later in the day. Investors
will look closely at the statement that will accompany the Fed
decision, searching for clues as to when the central bank will hike
interest rates. The Fed is overwhelmingly expected to keep the
Federal Funds Rate unchanged at 0.25-0.50 percent.
The Australian dollar rose earlier following the release of its
upbeat CPI data. In an shortwhile, the currency retreated.
Data from the Australian Bureau of Statistics showed that
consumer prices in Australia were up 1.0 percent on year in the
second quarter of 2016. That was shy of forecasts for 1.1 percent
and down from 1.3 percent in the three months prior.
On a quarterly basis, CPI added 0.4 percent, in line with
forecasts following the 0.2 percent contraction in the first
quarter.
The Reserve Bank of Australia's trimmed mean was up 0.5 percent
on quarter, topping forecasts for 0.4 percent and up from 0.2
percent in Q1. The trimmed mean climbed 1.7 percent on year, above
forecasts for 1.5 percent and unchanged from the previous three
months.
Tuesday, the Australian and the New Zealand dollar showed mixed
trading against their major rivals. While the aussie and the kiwi
fell against the yen, they rose against the U.S. dollar and the
euro.
Meanwhile, the Canadian dollar fell 0.01 percent against the
U.S. dollar, 0.92 percent against the yen and 0.19 percent against
the euro.
In the early Asian trading, the commodity currencies such as the
Australian, the New Zealand and the Canadian dollars traded higher
against their major rivals.
In the Asian trading, the Australian dollar fell to a 5-day low
of 1.4733 against the euro and a 2-day low of 0.7458 against the
U.S. dollar, from an early 9-day high of 1.4526 and an 8-day high
of 0.7565, respectively. If the aussie extends its downtrend, it is
likely to find support around 1.49 against the euro and 0.73
against the greenback.
Against the yen, the aussie dropped to 78.81 from an early 2-day
high of 79.57. On the downside, 74.00 is seen as the next support
level for the aussie.
The aussie slipped to a 2-day low of 0.9839 against the Canadian
dollar, from an early high of 0.9955. The aussie may test support
near the 0.96 region.
Against the NZ dollar, the aussie edged down to 1.0633 from an
early 2-day high of 1.0723. This may be compared to an early 1-week
low of 1.0624. The aussie is likely to find support around the 1.03
area.
The NZ dollar fell to 1.5687 against the euro and 74.09 against
the yen, from an early 9-day high of 1.5524 and a 6-day high of
74.71, respectively. If the kiwi extends its downtrend, it is
likely to find support around 1.62 against the euro and 72.00
against the yen.
Against the U.S. dollar, the kiwi edged down to 0.7005 from an
early high of 0.7075. The kiwi may test support near the 0.69
area.
The Canadian dollar fell to 1.3195 against the U.S. dollar and
79.75 against the yen, from 2-day highs of 1.3159 and 80.77,
respectively. If the loonie extends its downtrend, it is likely to
find support around 1.33 against the greenback and 76.00 against
the yen.
Against the euro, the loonie edged down to 1.4506 from an early
2-day high of 1.4459. The loonie may test support near the 1.46
area.
Looking ahead, Eurozone M3 money supply data for June, the first
estimate U.K. GDP data for the second quarter are due to be
released later in the day.
In the New York session, U.S. durable goods orders and pending
home sales data, both for June, are slated for release.
At 2:00 pm ET, the Federal Reserve will announce its decision on
monetary policy. The Fed is expected to keep the Federal Funds Rate
unchanged at 0.25-0.50 percent.
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