Antipodean Currencies Fall Amid Escalating Middle East Conflicts

(RTTNews) - The antipodean currencies such as the Australia and New Zealand dollars weakened against their major currencies in the European session on Tuesday, amid escalating Middle East tensions revived inflation and interest-rate concerns.

Spot gold slipped 0.2 percent to $4,396.21 an ounce while U.S. gold futures were down 0.8 percent at $4,440.29 an ounce.

The U.S. dollar index was marginally higher, recovering early losses as investors kept a close eye on developments in the Middle East and looked forward to the release of crucial U.S. inflation data this week, which could influence expectations around the Federal Reserve's September policy decision.

Iran threatened to retaliate against any new U.S. attacks on its assets and Saudi-led coalition forces vowed a resolute response to a wave of attacks from Houthi rebels.

Traders also watched for details of an Iranian deal with Oman to manage shipping through the Strait of Hormuz.

As inflation worries mount, the European Central Bank is widely expected to deliver a 25-basis-point interest-rate hike at its upcoming policy meeting on Thursday.

The AUD and NZD fell against its major peer currencies in the Asian session following China's August trade data, which showed weaker-than-expected import growth.

Data from the General Administration of Customs showed that China's exports registered a notable growth in August, reflecting strong foreign demand for hi-tech products.

Exports increased 25.0 percent year-on-year in August, faster than the 23.9 percent growth in July. The annual growth came in line with expectations.

At the same time, annual growth in imports accelerated to 28.2 percent from around 27.5 percent in July. However, the pace of growth was weaker than forecast of 30.0 percent.

As a result, the trade surplus rose to $119.09 billion from $112.5 billion in July. The surplus stood above the expected level of $118.6 billion. The surplus has remained above $100 billion for the fourth straight month.

In the European trading today, the Australian dollar fell to more than a 1-month low of 110.28 against the yen and a 4-day low of 0.9942 against the Canadian dollar, from early highs of 111.20 and 0.9970, respectively. If the aussie extends its downtrend, it is likely to find support around 109.00 against the yen and 0.97 against the loonie.

Against the U.S. dollar and the euro, the aussie edged down to 0.7205 and 1.6132 from early highs of 0.7223 and 1.6098, respectively. The aussie may test support near 0.70 against the greenback and 1.59 against the euro.

The NZ dollar fell to a 16-year low of 1.2353 against the Australian dollar and a 6-day low of 0.5836 against the U.S. dollar, from early highs of 1.2270 and 0.5886, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.24 against the aussie and 0.57 against the greenback.

Against the yen and the euro, the kiwi dropped to nearly a 9-month low of 89.67 and a 6-day low of 1.9894 from early highs of 90.53 and 1.9762, respectively. The kiwi is likely to find support near 88.00 against the yen and 2.01 against the euro.

Looking ahead, U.S. NFIB business optimism index for August, U.S. ADP weekly employment data, U.S. used car prices for August, U.S. consumer inflation expectations for August and consumer credit change for July are slated for release in the New York session.