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.
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