Commodity Currency's Slide Amid Escalating US-China Trade Tensions

(RTTNews) - The commodity currencies such as Australia, the New Zealand and the Canadian dollars weakened against their major currencies in the Asian session on Friday, amid the escalating trade tensions between the U.S. and China and renewed concerns about the U.S. banking sector after bad loans recently led to the bankruptcies of two auto industry-related companies, First Brands and Tricolor Holdings. Traders also resorted to profit taking after the recent gains in the markets.

The commodity-linked currencies such as the AUD, NZD and CAD have a tight trading relationship with China. Therefore, any change in China's economy could have an impact on these currencies.

Meanwhile, ahead of the Communist Party's fourth plenary session next week, China accused the U.S. of creating "unnecessary panic" over Beijing's controls on rare earth exports.

The U.S. government shutdown persists as the Senate rejected the House's spending patch for the tenth time.

The shutdown is now well into its third week with no signs that the Democratic minority in the U.S. Senate plans to back down from demands for health insurance subsidies being included.

Crude oil prices tumbled after the Energy Information said crude oil inventories in the U.S. increased much more than expected, sparking demand concerns. West Texas Intermediate Crude Oil for November delivery was down $0.97 or 1.66 percent at $57.30 per barrel.

Markets increase their wagers that the Reserve Bank of Australia will slash interest rates further.

In the Asian trading today, the Australian dollar fell to nearly a 2-month low of 1.8121 against the euro and more than a 2-week low of 96.89 against the yen, from yesterday's closing quotes of 1.8049 and 97.33, respectively. If the aussie extends its downtrend, it is likely to find support around 1.82 against the euro and 95.00 against the yen.

Against the U.S. and the Canadian dollars, the aussie slipped to 3-day lows of 0.6462 and 0.9104 from Thursday's closing quotes of 0.6482 and 0.9104, respectively. On the downside, 0.63 against the greenback and 0.89 against the loonie are seen as the next support levels for the aussie.

The aussie edged down to 1.1288 against the NZ dollar, from Thursday's closing value of 1.1320. The aussie may test support near the 1.11 region.

The NZ dollar declined to a 16-year low of 2.0463 against the euro and a 2-week low of 85.82 against the yen, from Thursday's closing quotes of 2.0431 and 85.98, respectively. If the kiwi extends its downtrend, it is likely to find support around 2.06 against the euro and 84.00 against the yen.

Against the U.S. dollar, the kiwi edged down to 0.5716 from yesterday's closing value of 0.5726. The kiwi may test support near the 0.56 region.

The Canadian dollar declined to a 16-year low of 1.6450 against the euro and nearly a 2-week low of 106.73 against the yen, from Thursday's closing quotes of 1.6432 and 106.90, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.65 against the euro and 105.00 against the yen.

Against the U.S. dollar, the loonie edged down to 1.4052 from yesterday's closing value of 1.4046. The next possible downside target for the loonie is seen around the 1.41 region.

Looking ahead, Eurozone inflation reports for September are due to be released in the European session at 5:00 am ET.

In the New York session, U.S. Baker Hughes oil rig count data, U.S. building permits, housing starts, import and export prices, all for September, are slated for release.