Commodity Currencies Slide Amid Crude Oil Price Drop

(RTTNews) - The commodity currencies such as the Australia, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Wednesday amid crude oil price drop, as markets awaited the outcome of US-China trade talks, which have yet to be approved by President Donald Trump, with China's poor oil demand and OPEC+ output increases weighing on the market.

Brent crude futures slid 19 cents, or 0.3 percent, to $66.680 per barrel, while U.S. West Texas Intermediate crude down 16 cents, or 0.3 percent, to $64.82.

U.S. and Chinese officials reached an agreement on a framework to restart their trade truce and resolve China's export restrictions on rare earth minerals and magnets, U.S. Commerce Secretary Howard Lutnick said on Tuesday, following two days of heated negotiations in London. The framework will first need to be approved by leaders in Washington and Beijing.

Meanwhile, on the supply side, OPEC+ intends to boost oil output by 411,000 barrels per day in July as it attempts to break up production cuts for the fourth consecutive month, with some analysts not anticipating regional demand to absorb the surplus barrels.

The weekly data on U.S. oil inventories from the Energy Information Administration, the Department of Energy's statistical arm, will be closely watched by markets.

In the Asian trading today, the Australian dollar fell to 2-day lows of 1.7565 against the euro and 0.8890 against the Canadian dollar, from yesterday's closing quotes of 1.7519 and 0.8924, respectively. If the aussie extends its downtrend, it is likely to find support around 1.77 against the euro and 0.86 against the loonie.

Against the U.S. dollar and the yen, the aussie edged down to 0.6498 and 94.20 from yesterday's closing quotes of 0.6530 and 94.57, respectively. The aussie may test support near 0.63 against the greenback and 92.00 against the yen.

The NZ dollar fell to 2-day lows of 0.6024 against the U.S. dollar, 1.8941 against the euro and 1.0805 against the Australian dollar, from yesterday's closing quotes of 0.6060, 1.8876 and 1.0775, respectively. The kiwi may test support around 0.59 against the greenback, 1.90 against the euro and 1.10 against the aussie.

Against the yen, the kiwi edged down to 87.35 from Tuesday's closing value of 87.77. On the downside, 85.00 is seen as the next support level for the kiwi.

The Canadian dollar fell to a 2-day low of 1.5603 against the euro, from yesterday's closing value of 1.5633. The loonie may test support near the 1.38 region.

Against the U.S. dollar and the yen, the loonie edged down to 1.3684 and 105.84 from Tuesday's closing quotes of 1.3669 and 105.97, respectively. The next possible downside for the loonie is seen around 1.38 against the greenback and 104.00 against the yen.

Looking ahead, U.S. MBA weekly mortgage approvals data, U.S. CPI data for May, Canada building permits for April and U.S. EIA crude oil data are slated for release in the New York session.