Forex News: Commodity Currencies Rise Amid Risk-on Mood

Commodity Currencies Rise Amid Risk-on Mood

(RTTNews) - The commodity linked currencies such as the Australia, the New Zealand and the Canadian dollars strengthened against their major currencies in the Asian session on Monday, as Asian stock markets traded higher with markets in Japan, Taiwan and South Korea surging, as traders remained cautious and shrugged off the uncertainty prevailing around the second round of peace talks between the U.S. and Iran. Traders also indulged in some bargain hunting after the recent war-related slump in the markets.

After abruptly cancelling the planned envoy trip to Pakistan for peace talks, U.S. President Donald Trump indicated that the Iran war will end soon, and the U.S. will be victorious.

In an interview on Fox News, Trump claimed that Iran's oil infrastructure could explode in about three days because of mechanical issues exacerbated by the U.S. blockade on its vessels.

According to Axios, Iran has offered the U.S. a new proposal to reopen the Strait of Hormuz and end the war, with nuclear negotiations postponed for a later stage.

Trump is expected to hold a Situation Room meeting with his top national security and foreign policy team later today to discuss potential next steps.

The U.S. Federal Reserve is scheduled to hold its policy meeting on April 28-29, with rates likely to stay unchanged for the third straight time.

A string of decisions by other central banks, including from the European Central Bank, the Bank of Japan and the Bank of England are also due this week, with investors awaiting important clues regarding how rates could move in coming months.

Gold edged up slightly to trade at $4,718 an ounce, while Brent crude futures climbed above $107 a barrel amid renewed worries about the Iran war and the Strait of Hormuz, which remains effectively closed amid stalled peace talks.

Tehran rejected direct talks with the U.S. under pressure, with Iranian President Masoud Pezeshkian reiterating that the country will not engage in "imposed negotiations under threats or blockade."

Analysts say that even if the Strait reopens, it could take months for oil flows to normalize.

Expectations for the Reserve Bank of Australia or the RBA hike are raised by rising energy prices.

In economic news, data from the National Bureau of Statistics showed that China's industrial profits increased notably in the first quarter, despite challenges posed by geopolitical tensions.

Industrial profits logged an annual growth of 15.5 percent in the January to March period. Profits had increased 15.2 percent in the first two months of the year.

In the Asian trading today, the Australian dollar rose to 4-day highs of 1.6346 against the euro and 114.28 against the yen, from Friday's closing quotes of 1.6394 and 113.96, respectively. If the aussie extends its uptrend, it is likely to find resistance around 1.62 against the euro and 115.00 against the yen.

Against the U.S. and the Canadian dollars, the aussie advanced to a 6-day high of 0.7178 and 0.9805 from last week's closing quotes of 0.7151 and 0.9774, respectively. The aussie may test resistance around 0.72 against the greenback and 0.99 against the loonie.

The aussie edged up to 1.2177 against the NZ dollar, from Friday's closing value of 1.2164. On the upside, 1.22 is seen as the next resistance level for the aussie.

The NZ dollar rose to a 4-day high of 0.5896 against the U.S. dollar, from Friday's closing value of 0.5879. The next possible upside target for the kiwi is seen around the 0.59 region.

Against the yen and the euro, the kiwi advanced to 4-day highs of 93.89 and 1.9899 from last week's closing quotes of 93.69 and 1.9941, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 95.00 against the yen and 1.97 against the euro.

The Canadian dollar rose to a 4-day high of 1.3661 against the U.S. dollar, from a recent low of 1.3679. The loonie may test resistance around the 1.35 region.

Against the yen and the euro, the loonie advanced to 116.70 and 1.6010 from last week's closing quotes of 116.60 and 1.6023, respectively. If the loonie extends its uptrend, it is likely to find resistance around 117.00 against the yen and 1.59 against the euro.

Looking ahead, U.S. Dallas Fed manufacturing index for April is due to be released in the New York session.

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