Market Commentary and Intraday News

Australian And NZ Dollars Weaken Ahead Of Fed Minutes

273 days ago

(RTTNews) - The Australian and New Zealand dollars edged lower against their major rivals on Wednesday in Asia as traders sold off high-yielding currencies ahead of some key risk-events.

The minutes of the Federal Reserve's July 31st-August 1st meeting is due for release later today. Investors expect that the Fed would give some directions and plans to spur the fragile economic recovery.

However, a number of upbeat economic data from the U.S. since the Federal Reserve's last meeting undermined hopes that another round of quantitative easing unlikely at its next meeting on Sept. 12. At this juncture, the Fed Chairman Bernanke's speech at the Jackson Hole Symposium in the month-end is seen crucial.

The market is also hopeful that a series of bilateral meetings between key Eurozone leaders may produce a lasting solution to the region's prolonged sovereign debt crisis.

Yesterday's Spanish auction showed a steep decline in the nation's borrowing costs amid speculation that the European Central Bank would resume its purchase of peripheral bonds.

Leading index in Australia was up 0.5 percent on month in June, Westpac Bank said today, coming in at a score of 284. That slows from the upwardly revised 0.9 percent increase to 2.82.6 in May, which saw an original improvement of 0.8 percent. The coincident index was up 0.1 percent on month in June to a score of 277.8.

Japan posted a merchandise trade deficit of 517.382 billion yen in July, the Ministry of Finance said today, sinking into the red for the eighth time in 10 months. The headline figure was sharply below forecasts for a shortfall of 270.0 billion yen following the downwardly revised 60.3 billion surplus in June.

Exports plummeted 8.1 percent on year, well shy of expectations for a decline of 2.9 percent following the 2.3 percent contraction in the previous month. Imports were up 2.1 percent on year versus forecasts for an increase of 3.0 percent after shedding 2.2 percent a month earlier.

The Australian dollar reached 1.1944 against the euro, its weakest level since July 17. The euro-aussie pair is presently staying a tad below its 23.6 percent retracement level of 1.1950 in the daily chart between a high in May and a low in August. Further risk-off mood could push the aussie back below the 1.20 level versus the euro after a gap of nearly 6-weeks.

The Australian dollar also slipped to a 1-week low of 82.72 against the yen and a 2-day low of 1.0440 against the US dollar in early Asian deals Wednesday. On the downside, the aussie may find support levels at 82.50 against the yen and 1.0420 against the greenback.

The Australian dollar moved mostly sideways against its Tasman rival, moving between 1.2940 and 1.2915. The aussie-kiwi pair is presently worth 1.2930 with 1.2900/10 seen as the next likely support level and 1.2975 seen as the probable resistance level.

The New Zealand dollar slipped to 1.5434 against the euro, its lowest level since July 25. The near-term bias for the kiwi is positive as the euro-kiwi pair is poised to retreat after having broken the channel trend line resistance at 1.5435/40.

The NZ dollar also slipped to a 6-day low of 64.01 against the yen and a 2-day low of 0.8079 against the US dollar on Wednesday morning in Asia. The kiwi dollar's next likely support levels are seen at 0.8045/50 against the greenback and 63.75/80 against the yen.

Looking ahead, the European economic docket is empty and the US existing home sales for July is the lone data to watch ahead of the FOMC minutes in the North American session.

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