Commodity Currency's Slide Amid Risk-off Mood

(RTTNews) - The commodity currencies such as Australia, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Monday amid increased risk-off mood by the investors, as the markets are priming up for the new U.S. tariffs later in the week, primarily the 25 percent tariffs on auto and auto parts imports. The Japanese market is pulling down the markets with a 3.7 percent drop on concerns that the tariffs could hit domestic production and auto sector jobs.

The uncertainty about U.S. President Donald Trump's aggressive trade policies and potential retaliation from major trading partners fueled fears of a slowdown in global economic growth.

U.S. President Donald Trump's 'Liberation Day' tariff plan will take effect globally on April 2.

Trump said on Sunday that reciprocal tariffs he is set to announce this week will include all nations, not just a smaller group of 10 to 15 countries with the biggest trade imbalances.

Weakness across all sectors led by mining and technology stocks, also led to the downturn of AUD, NZD and CAD.

Crude oil prices fell, but the most active futures contract still posted a weekly gain amid prospects of tighter supplies following the U.S. sanctions on Iran and Venezuela. West Texas Intermediate Crude oil futures for May settled at $69.36 a barrel, losing $0.56 or 0.8 percent. WTI crude futures gained 1.6 percent in the week.

In economic news, data from the National Bureau of Statistics showed that the China's manufacturing activity logged its fastest growth in a year in March as exports surged ahead of further tariff hikes. The factory PMI posted 50.5 in March compared to 50.2 in the prior month, said. A score above 50.0 indicates expansion in the sector. The reading was seen at 50.4.

Likewise, the non-manufacturing PMI rose to 50.8 in March from 50.4 in the previous month. The expected reading was 50.5. The composite output index advanced to 51.4 in March from 51.1 in February.

Data from the Reserve Bank of Australia showed that the private sector credit in Australia was up 0.5 percent on month in February, steady from the January reading. On a yearly basis, credit was up 6.5 percent. Housing credit was up 0.4 percent on month and 5.6 percent on year, while personal credit rose 0.1 percent on month and 1.9 percent on year and business credit gained 0.8 percent on month and 9.0 percent on year. Broad money was up 0.6 percent on month and 5.2 percent on year.

In the Asian trading today, the Australian dollar fell to nearly a 2-week low of 93.41 against the yen and a 4-day low of 0.8986 against the Canadian dollar, from Friday's closing quotes of 94.19 and 0.9001, respectively. If the aussie extends its downtrend, it is likely to find support around 0.61 against the greenback and 1.74 against the euro.

Against the euro and the yen, the aussie slipped to 1-week lows of 0.6275 and 1.7264 from last week's closing value of 0.6287 and 1.7219, respectively. The aussie may test support near 92.00 against the yen and 0.88 against the loonie.

The NZ dollar fell to more than 2-week lows of 0.5698 against the U.S. dollar, 84.89 against the yen and 1.9018 against the euro, from Friday's closing quotes of 0.5713, 85.59 and 1.8938, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.55 against the greenback, 83.00 against the yen and 1.92 against the euro.

Against the Australian dollar, the kiwi dropped to a 2-week low of 1.1025 from last week's closing value of 1.0997. On the downside, 1.12 is seen as the next support level for the kiwi.

The Canadian dollar fell to nearly a 2-week low of 103.74 against the yen and a 1-week low of 1.5538 against the euro, from Friday's closing values of 104.62 and 1.5501, respectively. If the loonie extends its downtrend, it is likely to find support around 101.00 against the yen and 1.57 against the euro.

Against the U.S. dollar, the loonie edged down to 1.4344 from last week's closing quote of 1.4317. On the downside, 1.45 is seen as the next support level for the loonie.

Meanwhile, the safe-haven yen strengthened against other major currencies in the Asian session today, as Asian stock markets traded higher.

In economic news, the value of retail sales in Japan was up a seasonally adjusted 0.5 percent on month in February, the Ministry of Economy, Trade and Industry or METI said on Monday - coming in at 12.193 trillion yen. That follows the 1.2 percent increase in January. On a yearly basis, sales rose 1.4 percent - moderating from 4.4 percent in the previous month.

The METI also said industrial production in Japan was up a seasonally adjusted 2.4 percent on month in February. That beat forecasts for an increase of 1.9 percent following the 1.1 percent contraction in January. On a yearly basis, industrial production was up 0.3 percent - moderating from 2.2 percent in the previous month.

Upon the release of the data, the METI maintained its assessment of industrial production, saying that it continued to fluctuate indecisively. According to the METI's forecast for industrial production, output is expected to rise 0.6 percent in March and 0.1 percent in April.

The yen rose to near 2-week highs of 161.05 against the euro and against 148.71 against the U.S. dollar, from Friday's closing quotes of 162.20 and 149.81, respectively. If the yen extends its uptrend, it is likely to find resistance around 155.00 against the euro and 147.00 against the greenback.

Against the pound and the Swiss franc, the yen advanced to 1-week highs of 192.75 and 169.10 from last week's closing quotes of 193.82 and 170.12, respectively. On the upside, 188.00 against the pound and 166.00 against the franc are seen as the next resistance levels for the yen.

Looking ahead, flash inflation figures are due from Germany at 8.00 am ET. Economists forecast consumer prices to climb 0.3 percent month-on-month in March after rising 0.4 percent in February.

In the New York session, U.S. Chicago PMI for March and U.S. Dallas Fed manufacturing index for March are slated for release.