CANBERA (dpa-AFX) - The antipodean currencies such as the Australia and the New Zealand dollars weakened against their major currencies in the European session on Tuesday, as European stocks declined as rising oil prices and bond yields stoked worries about inflation and interest-rate hikes.
A global bond rout deepened, driving sovereign borrowing costs across Europe.
Germany's 30-year government bond yield hit a fresh 15-year high while France's 30-year yield touched its highest level since 2008 as traders assessed Middle East tensions and awaited key U.S. labor market data this week for additional clues on the Federal Reserve's rate trajectory.
As inflation rises on elevated energy prices, the European Central Bank (ECB) is likely to raise its key interest rates by 25 basis points at its policy meeting on September 9-10.
Oil prices were sharply higher after the U.S. and Iran returned to tit-for-tat strikes, raising concerns about energy supplies and shipping through the Strait of Hormuz, a key waterway through which one-fifth of the world's oil is transported.
As the two sides escalate attacks on each other, traders braced for prolonged disruptions to energy flows from the Persian Gulf.
U.S. President Donald Trump has threatened to hit Iran 'hard' after the two foes traded fire for the first time in over a month.
Heightened tensions emerged after the U.S. attacked two Iranian rocket launchers on Larak Island and Iran retaliated with attacks on the United Arab Emirates and Jordan.
In economic news, data from the Australian Bureau of Statistics showed that the Australia posted a current account deficit of A$27.2 billion in the second quarter of 2026. That beat forecasts for a shortfall of A$29.7 billion following the upwardly revised A$25.4 billion deficit in the three months prior.
The capital and financial account surplus was A$5.3 billion, a decrease of A$11.3 billion on the Q1 surplus. The manufacturing sector in Australia continued to expand at a steady pace, the latest survey from S&P Global revealed on Tuesday with a manufacturing PMI score of 52.0.
That was unchanged from the July reading, and it remains above the boom-or-bust line of 50 that separates expansion from contraction.
Also, data from the same agency showed that the total number of building permits issued in Australia was down a seasonally adjusted 3.6 percent on month in July, coming in at 17,687. That beat expectations for a decline of 4.8 percent following the 7.2 percent gain in June.
On a yearly basis, approvals rose 9.0 percent - slowing from 28.8 percent in the previous month.
Australia posted a current account deficit of A$27.2 billion in the second quarter of 2026. That beat forecasts for a shortfall of A$29.7 billion following the upwardly revised A$25.4 billion deficit in the three months prior.
The capital and financial account surplus was A$5.3 billion, a decrease of A$11.3 billion on the Q1 surplus.
Data from Caixin showed that the manufacturing sector in China continued to expand in August, and at a faster rate, with a manufacturing PMI score of 51.5. That's up from 50.9 in July, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.
In the European trading today, the Australian dollar fell to 1-week low of 0.7141 against the U.S. dollar, from an early 4-day high of 0.7181. The aussie may test support around the 0.70 region.
Against the Canadian dollar and the euro, the aussie slipped to a 6-day low of 0.9907 and a 5-day low of 1.6233 from early highs of 0.9945 and 1.6182, respectively. If the aussie extends its downtrend, it is likely to find support around 0.98 against the loonie and 1.63 against the euro.
Against the yen and the NZ dollar, the aussie edged down to 114.22 and 1.2116 from early highs of 114.68 and 1.2138, respectively. The aussie may test support near 112.00 against the yen and 1.20 against the kiwi.
The NZ dollar fell to near 2-week lows of 0.5893 against the U.S. dollar and 94.25 against the yen, from early highs of 0.5929 and 94.71, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.57 against the greenback and 93.00 against the yen.
Against the euro, the kiwi dropped to nearly a 2-week low of 1.9674 from an early high of 1.9604. The kiwi may test support near the 1.98 region.
Looking ahead, Canada and U.S. S&P Global manufacturing PMI for August, U.S. Redbook report, U.S. ISM manufacturing PMI for August, U.S. construction spending for July, U.S. RCM/TIPP economic optimism index for September and U.S. Dallas Fed services index for August are slated for release in the New York session.
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