Commodity Currencies Slide, Yen Rises Amid Cautious Trade

The commodity currencies such as Australia, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Thursday, as traders remain cautious amid continued uncertainty surrounding U.S. President Donald Trump's trade policies, despite reaching trade deals between the U.S. and China as well as the U.S. and the U.K.

Fading enthusiasm regarding the de-escalation in global trade tensions, also led the traders to be cautious. Absence of fresh catalysts on the trade front, a cooling tech rally as well as anxiety ahead of a speech by Fed Chair Jerome Powell are also expected to keep market sentiment muted.

The Australian dollar traded higher against other major currencies in the Asian session after the release of Australia's jobs data.

Data from the Australian Bureau of Statistics showed that Australia's unemployment rate remained unchanged in April and employment increased sharply. Employment increased sharply by 89,000 from the previous month. Economists had expected only an increase of 20,900 for April.

The jobless rate remained unchanged at 4.1 percent in April, in line with expectations.

In the Asian trading today, the Australian dollar retreated to a 3-day low of 93.72 against the yen and a 2-day low of 1.7437 against the euro, from early highs of 94.38 and 1.7398, respectively. If the aussie extend its downtrend, it is likely to find support around 92.00 against the yen and 1.80 against the euro.

Against the U.S. and the Canadian dollars, the aussie slipped to 2-day lows of 0.6415 and 0.8970 from early highs of 0.6459 and 0.9014, respectively. On the downside, 0.62 against the greenback and 0.87 against the loonie are seen as the next support levels for the aussie.

The aussie edged down to 1.0896 against the NZ dollar, from an early near 1-1/2-month high of 1.0922. The next possible downside target for the aussie is seen around the 1.07 region.

The NZ dollar fell to a 2-day low of 0.5882 against the U.S. dollar, from an early high of 0.5917. The kiwi is likely to find support around the 0.57 region.

Against the yen and the euro, the kiwi slid to 6-day lows of 85.93 and 1.9018 from early highs of 86.53 and 1.8929, respectively. If the kiwi extends its downtrend, it is likely to find support around 84.00 against the yen and 1.93 against the euro.

The Canadian dollar fell to 6-day lows of 104.15 against the yen and 1.5688 against the euro, from early highs of 105.00 and 1.5619, respectively. If the loonie extends its downtrend, it is likely to find support around 103.00 against the yen and 1.59 against the euro.

Against the U.S. dollar, the loonie edged down to 1.3983 from an early high of 1.3960. The loonie may test support near the 1.43 region.

Meanwhile, the safe-haven yen strengthened against other major currencies in the Asian session on Thursday, as traders remain cautious. Trader's bets that the Bank of Japan will raise rates again.

Furthermore, BoJ Deputy Governor Shinichi Uchida reaffirmed that the central bank would continue to raise rates if the economy and prices improve as expected.

In economic news, data from the Japan Machine Tool Builders Association, or JMTBA showed that Japan's machine tool orders increased for the seventh straight month in April, driven by robust foreign demand.

Machine tool orders climbed 7.7 percent year-on-year in April, though slower than the 11.4 percent surge in the previous month.

Foreign orders grew 13.3 percent from last year, while domestic demand was down by 5.4 percent.

On a monthly basis, machine tool orders plunged 13.8 percent, reversing a 27.8 percent growth in March.

The yen roses to an 8-day high of 173.87 against the Swiss franc, from yesterday's closing value of 174.24. The next possible upside target for the yen is seen around the 172.00 region.

Against the euro and the pound, the yen advanced to 3-day highs of 163.46 and 193.87 from Wednesday's closing quotes of 163.96 and 194.50, respectively. The yen is likely to find resistance around 161.00 against the euro and 190.00 against the pound

Against the U.S. dollar, the yen edged up to 145.96 from yesterday's closing value of 146.64. If the yen extends its uptrend, it is likely to find resistance around the 142.00 region.

Looking ahead, Eurostat publishes euro area flash GDP and employment data for the first quarter in the European session at 5:00 am ET. The preliminary flash estimate showed that the currency bloc expanded 0.4 percent sequentially after rising 0.2 percent in the fourth quarter.

In the New York session, U.K. NIESR Monthly GDP tracker for April, Canada housing starts for April, manufacturing and wholesale sales for March, U.S. retail sales and PPI for April, U.S. weekly jobless claims data, U.S. NY Empire State and Philadelphia Fed manufacturing index for May, U.S. industrial and manufacturing productions for April, U.S. Business Inventories for March, U.S. NAHB housing market index for May and U.S. NOPA crush report are slated for release.

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