CANBERA (dpa-AFX) - The commodity currencies such as Australia, the New Zealand and the Canadian dollars weakened against other major currencies in the Asian session on Tuesday, as Asian stocks traded lower as a tech rally fizzled out due to valuation concerns and investors weighed mixed messages from Federal Reserve officials over the path of interest rates.
As the U.S. government entered its sixth week, a survey showed the U.S. industrial remains under pressure from weak growth and tariff-related uncertainty.
Due to the paucity of official US economic data as the ongoing government shutdown extends to 34 days, available private releases on the economy and jobs are being parsed by the U.S. Fed as well as by the markets amid uncertainty about the outlook for interest rates.
CME Group's FedWatch Tool is currently indicating a 66.4 percent chance the US Fed will lower rates by another quarter point last month, although that is down from 94.4 percent a week.
China's ambassador to the United States, Xie Feng, today urged Washington to avoid crossing Beijing's 'red lines' so a trade truce sealed between Presidents Donald Trump and Xi Jinping can hold.
He named Taiwan, democracy and human rights, China's political system, and development rights as Beijing's four red lines, adding: 'The most important thing is to respect each other's core interests and major concerns.'
The Australian dollar started trading lower against its major rivals in the Asian session after the Reserve Bank of Australia maintained its key interest rate as the full effects of earlier rate cuts are yet to be felt and policymakers became cautious after data showed evidence of more persistent inflation.
The policy board governed by Michele Bullock decided to hold the cash rate at 3.60 percent, as widely expected. The bank had reduced the rate by 25 basis points each in August, May and February. The current 3.6 percent is the lowest since March 2023.
In the statement on monetary policy, the bank said underlying inflation is set to be above the 2-3 percent range until the second half of 2026, reflecting the strong September quarter outcome.
In the Asian trading today, the Australian dollar fell to nearly a 2-week low of 0.6506 against the U.S. dollar and a 6-day low of 99.88 against the yen, from yesterday's closing quotes of 0.6538 and 100.83, respectively. If the aussie extends its downtrend, it is likely to find support around 0.64 against the greenback and 98.00 against the yen.
Against the euro and the Canadian dollar, the aussie slipped to 4-day lows of 1.7667 and 0.9153 from yesterday's closing quotes of 1.7617 and 0.9190, respectively. The aussie may test support near 1.80 against the euro and 0.89 against the loonie.
The NZ dollar fell to a 3-year low of 1.489 against the Australian dollar and nearly a 6-month low of 0.5673 against the U.S. dollar, from yesterday's closing quotes of 1.1456 and 0.5707, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.15 against the aussie and 0.55 against the greenback.
Against the yen and the euro, the kiwi dropped to nearly a 2-week low of 87.13 and a 2-week low of 2.0306 from Monday's closing quotes of 88.00 and 2.0186, respectively. The kiwi may test support near 85.00 against the yen and 2.05 against the euro.
The Canadian dollar fell to a 6-day low of 109.05 against the yen, from yesterday's closing value of 109.72. The loonie may test support near the 106.00 region.
Against the euro and the U.S. dollar, the loonie slipped to 1.6218 and 1.4074 from Monday's closing value of 1.6189 and 1.4056, respectively. If the loonie extends its downtrend, it is likely to find support around 1.65 against the euro and 1.41 against the greenback.
Meanwhile, the safe-haven yen strengthened against other major currencies in the Asian session today amid risk-off sentiment by the investors.
In economic news, the manufacturing sector in Japan continued to contract in October, and at a faster pace, the latest survey from Jibun Bank revealed on Tuesday with a manufacturing PMI score of 48.2. That missed expectations for 48.3 and was down from 48.5 in September. It also moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.
In the Asian trading today, the yen rose to a 6-day high of 176.79 against the euro and more than a 2-week high of 189.97 against the Swiss franc, from yesterday's closing quotes of 177.63 and 190.81, respectively. If the yen extends its uptrend, it is likely to find resistance around 175.00 against the euro and 188.00 against the franc.
Against the pound, the yen advanced to a 5-day high of 201.11 from Monday's closing value of 202.55. On the upside, 200.00 is seen as the next resistance level for the yen.
The yen climbed to a 5-day high of 153.34 against the U.S. dollar, from an early near 9-month low of 154.48. The yen may test resistance around the 148.00 region.
Looking ahead, U.S. and Canada trade data for August and U.S. Redbook report and factory orders for August are slated for release in the New York session.
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