Commodity Currencies Rise Amid Risk Appetite
November 28 2023 - 8:40PM
RTTF2
Commodity currencies such as the Australia, the New Zealand and
the Canadian dollars strengthened against their major currencies in
the Asian session on Wednesday, as Asian stock markets traded
mostly in the green, following the broadly positive cues from the
Wall Street overnight. Traders are also cautiously optimistic over
the outlook for interest rates following recent economic data.
Strong gains among gold miners and technology stocks, also
boosted the investor sentiment.
The markets were boosted after domestic data released showed the
monthly Consumer Price Index (CPI) indicator dropped to a
three-month low. This is also the first decline in annual inflation
and the slowest pace since July.
In economic news, Australia's monthly Consumer Price Index (CPI)
indicator rose 4.9 percent in the year to October 2023, slowing
from a 5.6 percent gain in the year to September 2023 and was below
the market consensus of 5.2 percent. It was the first decline in
annual inflation since July. Inflation remained well above the
Reserve Bank of Australia's target range of 2 to 3 percent.
Meanwhile, the Australian Bureau of Statistics said the value of
total construction work done in Australia was up a seasonally
adjusted 13 percent on quarter in the third quarter of 2023, coming
in at A$64.768 billion. That beat forecasts for an increase of 0.3
percent and was up from 0.4 percent in the three months prior. On a
yearly basis, the value of overall construction work was up 8.5
percent.
Crude oil prices rose sharply on hopes that OPEC will extend
output cuts at Thursday's ministerial meeting. A weak dollar
contributed as well to the jump in oil prices. West Texas
Intermediate Crude oil futures for January ended up $1.55 or 2.1
percent at $76.41 a barrel.
The NZ dollar appreciated sharply after the announcement of
Reserve Bank of New Zealand's Official Cash Rate steady, as
expected.
The Reserve Bank of New Zealand announced that it is holding its
Official Cash Rate steady at 5.50 percent, in line with
expectations and unchanged.
In the accompanying statement, the RBNZ said that interest rates
are restricting spending in the economy and consumer price
inflation is declining, as is necessary to meet the Committee's
Remit. However, inflation remains too high, and the Committee
remains wary of ongoing inflationary pressures.
In the Asian trading now, the Australian dollar rose to nearly a
4-month high of 0.6677 against the U.S. dollar and more than a
3-week high of 1.6498 against the euro, from yesterday's closing
quotes of 0.6648 and 1.6526, respectively. If the aussie extends
its uptrend, it is likely to find resistance around 0.68 against
the greenback and 1.63 against the euro.
Against the Canadian dollar, the aussie edged up to 0.9043 from
yesterday's closing value of 0.9024. The aussie may test resistance
near the 0.91 region.
The NZ dollar rose to nearly a 4-month high of 0.6209 against
the U.S. dollar, from yesterday's closing value of 0.6136. The kiwi
may test resistance near the 0.64 region.
The kiwi advanced to nearly a 2-week high of 91.22 against the
yen, from a recent 6-day low of 90.23. On the upside, 92.00 is seen
as the next resistance level for the kiwi.
Against the euro and the Australian dollar, the kiwi climbed to
1-1/2-month highs of 1.7742 and 1.0729 from yesterday's closing
quotes of 1.7908 and 1.0833, respectively. If the kiwi extends its
uptrend, it is likely to find resistance around 1.74 against the
euro and 1.06 against the aussie.
The Canadian dollar rose to a 2-month high of 1.3541 against the
U.S. dollar, from yesterday's closing value of 1.3574. The next
upside possible target for the loonie is seen around the 1.33
region.
Against the yen, the loonie edged up to 08.75 from a recent
1-week low of 108.27. If the loonie extends its uptrend, it is
likely to find resistance around the 111.00 area.
The loonie advanced to 1.4899 against the euro, from yesterday's
closing value of 1.4918. On the upside, 1.46 is seen as the next
resistance level for the loonie.
Looking ahead, Germany's import price data for October is due to
be released at 2:00 am ET in the pre-European session.
In the European session, the Bank of England is set to release
mortgage approvals for October and the European Commission
publishes euro area economic sentiment survey results for
November.
At 3:00 am ET, the European Central Bank will hold its
non-monetary policy meeting in Frankfurt.
In the New York session, U.S. MBA mortgage approvals data,
Canada quarterly second estimate GDP growth rate, U.S. retail and
wholesale inventories for October, good trade balance data for
October, U.S. EIA crude oil data and U.S. Fed's Beige book report
are slated for release.
At 8:00 am ET, Destatis is scheduled to issue Germany's flash
consumer and harmonized prices for November. Consumer price
inflation is expected to slow to 3.5 percent from 3.8 percent in
October.
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