ANTIPODEAN CURRENCIES FALL AMID RISK AVERSION
Antipodean currencies such as the Australia and the New Zealand dollars weakened against their major rivals in the Asian session on Friday amid risk aversion, as investors react to interest rate hikes by the Bank of England, the Norges Bank and the Swiss National Bank as well as inflation concerns that triggered growth worries.
U.S. Fed Chair Jerome Powell also reiterated plans to continue raising interest rates during his second day of testimony on Capitol Hill.
Powell made it clear that inflationary pressures continue to run high and the fight against inflation has "a long way to go." CME Group's FedWatch Tool currently indicates a 74.4% chance the Fed will raise rates by another quarter point following its next meeting in late July.
In economic news, the manufacturing sector in Australia continued to contract in June, albeit at a slower pace, the latest survey from Judo Bank revealed on Friday with a manufacturing PMI score of 48.6. That's up from 48.4 in May, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services PMI fell from 52.1 in May to 50.7 in June, while the composite index slipped from 51.6 in May to 50.5 in June.
Crude oil prices fell, as interest rate hikes and inflation concerns raised concerns about the outlook for fuel demand, while a stronger greenback also weighed. West Texas Intermediate Crude oil futures for August ended lower by $3.02 or 4.1 percent at $69.51 a barrel.
In the Asian trading today, the Australian dollar fell to a 3-day low of 95.74 against the yen, from a recent 3-day high of 96.84. On the downside, 92.00 is seen as the next support level for the aussie.
In economic news, overall consumer prices in Japan were up 3.2 percent on year in May, the Ministry of Internal Affairs and Communications said on Friday. That was well shy of estimates for 4.1 percent and down from 3.5 percent in April. On a monthly basis, consumer prices rose 0.1 percent - slowing from 0.6 percent a month earlier.
Against the U.S., the Canada and the New Zealand dollars, the aussie dropped to more than a 2-week low of 0.6691, more than a 3-week low of 0.8826 and nearly a 3-week low of 1.0897 from yesterday's closing quotes of 0.6755, 0.8883 and 1.0929, respectively. If the aussie extends its downtrend, it may find support around 0.65 against the greenback, 0.86 against the loonie and 1.07 against the kiwi.
The aussie slipped to a 3-week low of 1.6333 against the euro from yesterday's closing value of 1.6214. The aussie may test support around the 1.65 region.
The NZ dollar fell to a 3-day low of 0.6137 against the U.S. dollar and more than a 3-week low of 1.7812 against the euro, from yesterday's closing quotes of 0.6177 and 1.7725, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.60 against the greenback and 1.79 against the euro.
Against the yen, the kiwi edged down to 87.82 from an early 8-year high of 88.59. The next possible downside target for the kiwi is seen around the 85.00 area.
Meanwhile, the safe-haven U.S. dollar rose against other major currencies in the Asian session.
The U.S. dollar rose to 143.44 against the yen for the first time since 10th November 2022. At yesterday's close, the greenback was trading at 143.11. The greenback may find resistance around the 146.00 region.
Against the euro, the pound, the Swiss franc and the Canadian dollar, the greenback advanced to 2-day highs of 1.0921, 1.2696, 0.8983 and 1.3197 from yesterday's closing quotes of 1.0956, 1.2747, 0.8946 and 1.3150, respectively. If the greenback extends its uptrend, may find resistance around 1.07 against the euro, 1.24 against the pound, 0.92 against the franc and 1.35 against the loonie.
Looking ahead, PMI reports from different European economies and U.K. for June are due to be released in the European session.
At 5:15 am ET, Federal Reserve Bank of St. Louis President James Bullard is scheduled to give "Optimal Macroeconomic Policies in a Heterogeneous World" presentation before the Central Bank of Ireland and International Journal of Central Banking Research Conference, in DUBLIN, Ireland.
In the New York session, Canada manufacturing and wholesales preliminary data for May, U.S. flash PMI reports for June and U.S. Baker Hughes oil rig count data are slated for release.
At 8:00 am ET, Federal Reserve Bank of Atlanta President Raphael Bostic will participate in conversation on relevant topics to the finance community and business before the University of Georgia Terry College of Business CFO Roundtable, in Atlanta, U.S.
45 minutes later, ECB board member Fabio Panetta will participate in a panel discussion on future of crypto at 22nd BIS Annual Conference on central banks, macro-financial stability and the future of the financial system in Basel, Switzerland.
At 1:40 pm ET, Federal Reserve Bank of Cleveland President Loretta Mester will give closing remarks before the Policy Summit 2023: Communities Thriving in a Changing Economy" conference hosted by the Federal Reserve Bank of Cleveland, in Cleveland, Ohio, U.S.
News are provided by InstaForex
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