Commodity-currencies drop in Asia alongside Oil

FXStreet (Mumbai) - Amid light trading calendar extending into Asia this Wednesday, the focus continues to remain on the oil price action, with the commodity-currencies complex mirroring the moves in the black gold. While the mixed sentiment around the greenback continues to keep the upside in USD/JPY contained.

Key headlines in Asia

Impact on capital flows must be considered when adjusting RRR – PBOC’s Ma

WTI drops in Asia, rising crude supplies weigh

US dollar mixed in Asia, A data-thin Europe ahead

Low volumes and limited macro news continue to remain the underlying factor this week, and hence, the Asian traders continue take advantage of the unusual volatility in markets in the last couple of days of this year. On data-front, the Asian calendar remained absolutely empty and therefore, the G10 currencies took cues from the price-movement seen in the commodities, especially oil.

Among the commodity-currencies pack, the Kiwi is the biggest loser so far in Asia, with the losses partly attributed to the renewed sell-off in oil prices and also on a profit-taking slide after previous extensive rally. At the moment, NZD/USD trades -0.17% lower at 0.6856. The AUD/USD pair also keeps losses and remains capped below 0.73 barrier as the Aussie fails to find support from rallying Australian stocks and a broadly muted US dollar. The Canadian dollar on the other hand wavers between gains and losses, with the sentiment dented by falling oil prices.

The US dollar traded largely subdued against the European currencies while against the yen it traded almost flat around 120.50 levels. Markets now eagerly await a catalyst for fresh momentum on the major. On Tuesday, the US consumer sentiment improved in Dec while the US goods trade gap shrank marginally to $60.5 billion in Nov.

On the equities space, Asian indices trade mixed, with Japan’s benchmark, the Nikkei rallying 0.48% to 19,072. Australia’s S&P/ASX jumps +1.01 for the ninth day in a row. While the mainland China’s benchmark, the Shanghai Composite trades muted at 3,561, while Hong Kong’s Hang Seng drops -0.27% to 21,940.

Looking towards Europe and the US, we have second-tier data on the cards, including Eurozone money supply, the UK's nationwide HPI data and pending home sales data from the US.

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet explained, “With the technical picture suggesting a limited bearish scope at the time being, given that in the 4 hours chart, the technical indicators have also reversed course and turned higher after briefly breaking below their mid-lines. Also, the decline stalled around the 38.2% retracement of the latest daily decline between 1.1059 and 1.0804, and now hovers around the 50% retracement of the same decline. Trading will continue to remain reduced during this Wednesday, with some second-line data scheduled both, in Europe and the US.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.