Forex News: Commodity Currencies Slide Amid Risk-off Mood

Commodity Currencies Slide Amid Risk-off Mood

(RTTNews) - The commodity currencies such as Australia, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Wednesday, as Asian stock markets traded lower with steep losses in Japan, Singapore and Taiwan as traders remain concerned about rising tensions between the U.S. and China amid the new reciprocal tariffs on imports into the U.S. The steeper-than-expected tariffs ignited fears over an economic recession globally.

Meanwhile, U.S. Treasury Secretary Scott Bessent said approximately 70 countries have approached the White House about trade talks, with Japan purportedly getting priority status.

China has vowed to "fight to the end" after Trump threatened to impose an additional 50 percent tariff on Chinese goods unless the country withdraws its new 34 percent tariff on U.S. goods. Beijing said the U.S. threat to escalate tariffs against China is a "mistake on top of a mistake" and amounts to blackmail.

A White House official told CNBC the effective tariff rate in China will spike to 104 percent at midnight on April 9, when Trump's other "reciprocal tariffs" are also set to take effect.

Crude oil prices once again came under pressure after showing a strong move to the upside early in the session. West Texas Intermediate for May delivery tumbled $1.12 or 1.9 percent to $59.58 a barrel, its lowest level since April 2021.

Meanwhile, the New Zealand dollar had changed little against its major counterparts after the RBNZ rate-cut decision.

The Reserve Bank of New Zealand reduced its benchmark rate by a quarter-point, as expected and hinted at further easing as recent increases in trade tariffs pose downside risks to economic outlook.

The Monetary Policy Committee, led by acting governor Christian Hawkesby, decided to cut the Official Cash Rate by 25 basis points to 3.50 percent, which was the lowest since October 2022.

The committee observed that a 25 basis-point reduction would be consistent with the mandate of maintaining low and stable inflation.

In the Asian trading now, the Australian dollar fell to more than 5-year lows of 0.5915 against the U.S. dollar, 1.8556 against the euro and 0.8442 against the Canadian dollar, from yesterday's closing quotes of 0.5953, 1.8440 and 0.8487, respectively. If the aussie extends its downtrend, it is likely to find support around 0.5953 against the greenback, 1.88 against the euro and 0.80 against the loonie.

Against the yen, the aussie dropped to more than a 3-year low of 86.05 from Tuesday's closing value of 86.83. The aussie may test support the 85.00 area.

The NZ dollar fell to more than a 15-year low of 2.0012 against the euro, more than a 5-year low of 0.5486 against the U.S. dollar and nearly a 3-year low of 79.81 against the yen, from yesterday's closing quotes of 1.9907, 0.5515 and 80.43, respectively. If the kiwi extends its downtrend, it is likely to find support around 2.02 against the euro, 0.53 against the greenback and 78.00 against the yen.

Against the Australian dollar, the kiwi edged down to 1.0828 from Tuesday's closing value of 80.43. The kiwi may test support around the 1.10 region.

The Canadian dollar fell to a 2-day low of 1.4274 against the U.S. dollar, from yesterday's closing value of 1.4257. The loonie is likely to 1.45 region.

Against the yen and the euro, the loonie slid to near 1-month lows of 101.63 and 1.5744 from Tuesday's closing quotes of 102.31 and 1.5650, respectively. If the loonie extends its downtrend, it is likely to support around 100.00 against the yen and 1.59 against the euro.

Looking ahead, U.S. mortgage approvals data, U.S. EIA crude oil data and U.S. FOMC minutes of its latest meeting are slated for release in the New York session.

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