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 Tuesday as Asian stock markets traded lower amid a substantial rebound in both crude oil prices and bond yields, renewing concerns about the outlook for global inflation and interest rates. Market sentiment is also hit by continued uncertainty about the resolution of the Middle East conflict.

U.S. President Donald Trump rejected Iran's conditional proposal for reopening the Strait of Hormuz. Iran's proposal would have purportedly reopened the strait and resumed nuclear talks in return for the U.S. lifting its blockade of Iranian ports.

Meanwhile, oil flows have resumed through Saudi Arabia's East-West pipeline following repairs to a key pipeline that provides an alternative route around the Strait of Hormuz.

The Australian dollar traded lower against its major rivals after the Reserve Bank of Australia lifted its benchmark rate by a quarter-point as some of the upside risks to inflation materialized. The AUD was weakened as traders quickly reduced their wagers in anticipation of further rate increases.

The policy board, governed by Michele Bullock, unanimously decided to raise the cash rate target to 4.60 percent. The decision came in line with expectations.

"... inflation is still too high and the Board judged that, in light of recent developments, a further tightening in financial conditions is warranted to support a return of inflation to target in a reasonable period," the bank said in a statement.

The board said it will continue to do what is necessary to bring inflation sustainably back to target, including raising the interest rate further if needed.

In economic news, Australian household spending was flat month-on-month in August 2026, following a 1.1 percent increase in the prior month and ending three consecutive months of growth. On an annual basis, household spending rose 6.8 percent, easing from 7.0 percent in July, which was the fastest growth since June 2023.

In the Asian trading today, the Australian dollar fell to a 2-month low of 0.6978 against the U.S. dollar, more than a 2-week low of 109.83 against the yen and a 5-day low of 0.9905 against the Canadian dollar, from yesterday's closing quotes of 0.7016, 110.39 and 0.9970, respectively. If the aussie extends its downtrend, it is likely to find support around 0.68 against the greenback, 108.00 against the yen and 0.98 against the loonie.

Against the euro and the NZ dollar, the aussie dropped to more than a 1-month low of 1.6273 and a 2-week low of 1.2341 from an early 5-day high of 1.6167 and a 6-day high of 1.2438, respectively. The aussie may test support near 1.64 against the euro and 1.21 against the kiwi.

The NZ dollar fell to a 3-month low of 0.5644 against the U.S. dollar, from yesterday's closing value of 0.5663. The kiwi may test support near the 0.55 region.

Against the yen and the euro, the kiwi edged down to 88.88 and 2.0121 from Monday's closing quotes of 89.11 and 2.0081, respectively. If the kiwi extends its downtrend, it is likely to find support around 87.00 against the yen and 2.02 against the euro.

The Canadian dollar fell to nearly a 3-month low of 1.4193 against the U.S. dollar, from yesterday's closing value of 1.4177. On the downside, 1.43 is seen as the next support level for the loonie.

Against the yen and the euro, the loonie edged down to 110.86 and 1.6123 from Monday's closing quotes of 111.00 and 1.6113, respectively. If the loonie extends its downtrend, it is likely to find support around 109.00 against the yen and 1.62 against the euro.

Looking ahead, the U.K. Bank of England consumer credit and mortgage approvals data for August and Eurozone economic sentiment for September are slated for release in the European session.

In the New York session, Canada GDP data for July, U.S. Redbook report and U.S. S&P/Case-Shiller home price for July, U.S. Dallas Fed services index for September and U.S. Consumer Board's consumer confidence for September is slated for release.