Commodity Currency's Slide Amid Risk-off Mood

(RTTNews) - The commodity currencies such as the Australia, the New Zealand and Canadian dollars weakened against their major currencies in the Asian session on Wednesday amid increasing risk-off sentiment, dragged by the benchmark indexes in Japan and South Korea which are plunging 4 to 5 percent each on concerns over stretched valuations as global tech stocks tumble on fears that an AI bubble is about to burst.

The weakness in the markets also came as Goldman Sachs CEO David Solomon warned of a significant correction by the equity markets over the next 1 to 2 years.

As the ongoing US government shutdown in day 35 has indefinitely postponed the release of key US data, the US Fed and the markets are now left to pore over only private data to get clues on the economy.

Payroll processor ADP is scheduled to release its report on private sector employment, which could shed light on the strength of the labor market amid uncertainty about the outlook for interest rates.

The Fed has instituted two rate-cuts this year. Fed officials are divided on another rate cut at their upcoming December 9-10 meeting. Expectations of another U.S. Federal Reserve rate cut is fading away amid divergent comments from Fed officials.

On Friday, Kansas City Fed President Jeff Schmid had stated that as he felt inflation was too high, he did not favor a rate cut.

CME Group's FedWatch Tool is currently indicating a 70.1% chance of a 25-basis-point interest rate cut at the Federal Reserve's meeting coming up on December 9-10.

Crude oil prices declined sharply due to excess supply concerns. West Texas Intermediate crude for December delivery was down $0.44 or 0.72 percent at $60.61 per barrel.

Data from S&P Global showed that the service sector in Australia continued to expand in October, and at a slightly faster rate, with a PMI score of 52.5. That's up marginally from 52.4 in September.

Also, China's service sector continued to grow in October as new business growth accelerated despite a fall in export sales. The headline RatingDog service Purchasing Managers' Index fell to 52.6 in October from 52.9 in September.

Although the growth was the softest in three months, the sector extended the current period of expansion that began in January 2023.

Data from Statistics New Zealand showed that the jobless rate in New Zealand came in at a seasonally adjusted 5.3 percent in the third quarter of 2025. That was in line with expectations and up from 5.2 percent in the three months prior.

The employment change was roughly flat on quarter versus forecasts for an increase of 0.1 percent following the downwardly revised 0.2 percent drop in the previous quarter.

In the Asian trading today, the Australian dollar fell to nearly a 3-week low of 0.6459 against the U.S. dollar and an 8-day low of 1.7787 against the euro, from yesterday's closing quotes of 0.6490 and 1.7683, respectively. If the aussie extends its downtrend, it is likely to find support around 0.63 against the greenback and 1.80 against the euro.

Against the yen and the Canadian dollar, the aussie dropped to near 2-week lows of 98.83 and 0.9119 from Tuesday's closing quotes of 99.73 and 0.9169, respectively. On the downside, 96.00 against the yen and 0.90 against the loonie are seen as the next support levels for the aussie.

The aussie edged down to 1.1467 against the NZ dollar, from yesterday's closing value of 1.1498. The next possible downside target for the aussie is seen around the 1.12 region.

The NZ dollar fell to nearly a 7-month low of 0.5631 against the U.S. dollar, from yesterday's closing value of 0.5645. The kiwi is likely to find support around the 0.55 region.

Against the yen and the euro, the kiwi slid to more than 2-week low of 86.16 and 2.0403 from Tuesday's closing quotes of 86.73 and 2.0344, respectively. If the kiwi extends its downtrend, it is likely to find support around 84.00 against the yen and 2.05 against the euro.

The Canadian dollar fell to nearly a 7-month low of 1.4120 against the U.S. dollar, from yesterday's closing value of 1.4104. The loonie may test support near the 1.42 region.

Against the yen and euro, the loonie dropped to a 2-week low of 108.37 and a 1-week low of 1.6224 from Tuesday's closing quotes of 108.96 and 1.6195, respectively. If the loonie extends its downtrend, it is likely to find support around 105.00 against the yen and 1.63 against the euro.

Looking ahead, U.S. MBA mortgage approvals data, U.S. ADP employment data for October, U.S. and Canada S&P Global PMI data for October and U.S. EIA crude oil data are slated for release.