Australian, NZ Dollars Drop; Yen Advances On Rising Recession Fears

(RTTNews) - The Australian and NZ dollars fell against their major counterparts in the Asian session on Friday, while the yen climbed, amid rising risk aversion as aggressive rate hikes from the Federal Reserve to curb inflation intensified recession fears.

The Fed's preferred inflation measure held around multi-decade highs in May and a measure of U.S. consumer spending fell in May for the first time this year and prior months were revised lower, underlining the gloomy outlook.

Oil extended overnight losses as OPEC+ said that it would stick to moderate increases in oil production in August.

Sentiment at Japan's large manufacturers worsened in the April-to-June period, the Bank of Japan's quarterly tankan business survey showed, rekindling worries about the world's third largest economy.

In economic news, the manufacturing sector in Australia continued to expand in June, the latest survey from S&P Global showed, with a manufacturing PMI score of 56.2.

That's up from 55.7 in May and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

The aussie declined to more than 2-year lows of 0.6805 against the greenback and 0.8798 against the loonie, reversing from its early highs of 0.6903 and 0.8887, respectively. The next possible support for the aussie is seen around 0.66 against the greenback and 0.86 against the loonie.

The aussie depreciated to a 3-day low of 1.1015 against the kiwi, 8-day low of 1.5343 versus the euro and more than a 4-week low 91.86 against the yen, off its prior highs of 1.1065, 1.5172 and 93.79, respectively. The aussie is likely to find support around 1.08 against the kiwi, 1.55 versus the euro and 89.5 against the yen.

Retreating from its prior highs of 0.6247 against the greenback, 84.85 against the yen and 1.6770 against the euro, the kiwi slipped to more than a 2-year low of 0.6171, more than 2-week low of 83.22 and more than a 4-month low of 1.6940, respectively. The currency may face support around 0.60 against the greenback, 80.00 against the yen and 1.71 against the euro.

The yen touched 4-day highs of 140.83 against the franc, 134.74 against the greenback and 104.26 against the loonie, up from its previous lows of 142.32, 135.99 and 105.66, respectively. The currency is seen facing resistance around 132.00 against the franc, 124.00 against the greenback and 99.00 against the loonie.

The yen appreciated to 2-week highs of 140.83 against the euro and 163.26 against the pound, after dropping to 142.43 and 165.31, respectively in early deals. Next immediate resistance for the yen is seen around 136.00 against the euro and 156.00 against the pound.

Looking ahead, PMI reports from major European economies, as well as U.K. mortgage approvals for May and Eurozone flash inflation for June are due in the European session.

U.S. ISM manufacturing PMI for June and construction spending for May are set for release in the New York session.