Commodity Currencies Drop On Geopolitical Tensions

Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major counterparts in the Asian session on Thursday, as investors remained unclear amid rising tensions between the U.S. and North Korea.

U.S. President Donald Trump threatened to meet North Korean nuclear tests “with fire and fury.” North Korea responded to Trump’s comments, claiming that it was “carefully examining” a strike on U.S. Pacific territory of Guam.

In other economic news, data from the Melbourne Institute showed that Australia’s inflationary expectations declined in August. The expected inflation rate fell by 0.2 percentage points to 4.2 percent in August from 4.4 percent in July.

The Reserve Bank of New Zealand held its official cash rate at a record low 1.75 percent, as widely expected, and said monetary policy will remain accommodative for a considerable period.

In the Asian trading, the Australian dollar fell to 0.7868 against the U.S. dollar, 86.54 against the yen and 1.4924 against the euro, from yesterday’s closing quotes of 0.7886, 86.80 and 1.4903, respectively. If the aussie goes down further, it may find support around 0.77 against the greenback, 85.00 against the yen, and 1.51 against the euro.

Against the Canadian dollar, the aussie dropped to 1.0007 from an early 2-day high of 1.0043. The aussie may test support near the 0.98 region.

The NZ dollar fell to more than a 3-week low of 0.7265 against the U.S. dollar and nearly a 2-month low of 79.92 against the yen, from an early 2-day highs of 0.7368 and 80.99, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.71 against the greenback and 78.00 against the yen.

Against the euro and the Australian dollar, the kiwi dropped to nearly a 3-month low of 1.6147 and a 3-week low of 1.0838 from an early 3-day highs of 1.5961 and 1.0704, respectively. The kiwi is likely to find support near 1.62 against the euro and 1.09 against the aussie.

The Canadian dollar fell to nearly a 4-week low of 1.2726 against the U.S. dollar and a 2-day low of 1.4937 against the euro, from yesterday’s closing quotes of 1.2694 and 1.4928, respectively. If the loonie extends its downtrend, it could find support around 1.30 against the greenback and 1.51 against the euro.

Against the yen, the loonie dropped to 86.42 from yesterday’s closing value of 86.69. On the downside, 85.00 is seen as the next support level for the loonie.

Meanwhile, the safe-haven currencies such as…

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