Australian Dollar Slides Amid Risk Aversion

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Wednesday amid risk aversion, as weak crude oil and bullion prices triggered some heavy selling at several counters in energy and materials sectors.

Hopes also dwindled on an interest rate cut in the near future following some hawkish comments from central bank officials. U.S. Fed Governor Christopher Waller said interest rate cuts are likely this year but added that the central bank can take its time relaxing monetary policy. He said the process should be "carefully calibrated and not rushed."

Crude oil prices fell, as a stronger dollar and forecasts that weather in the U.S. will be warmer than normal weighed on oil prices. West Texas Intermediate Crude oil futures ended down $0.28 at $72.40 a barrel.

In economic news, data from the National Bureau of Statistics showed that the China's gross domestic product expanded 5.2 percent on year in the fourth quarter of 2023, shy of expectations for 5.3 percent but up from 4.9 percent in the third quarter. On a seasonally adjusted quarterly basis, GDP rose 1.0 percent, in line with expectations and slowing from 1.3 percent in the three months prior.

Also, the NBS said that the jobless rate in China was 5.1 percent in December versus forecasts for a steady reading of 5.0 percent.

The Australian dollar traded lower against its major rivals on Tuesday.

In the Asian trading today, the Australian dollar fell to more than a 1-1/2-month low of 1.6559 against the euro, from yesterday's closing value of 1.6511. On th downside, 1.68 is seen as the next support level for the aussie.

Against the U.S. and the Canadian dollars, the aussie dropped to a 5-week low of 0.6561 and a 2-month low of 0.8861 from yesterday's closing quotes of 0.6583 and 0.8882, respectively. If the aussie extends its downtrend, it is likely to find support around 0.63 against the greenback and 0.86 against the loonie.

The aussie slipped to 96.74 against the yen, from a recent high of 97.14. The next possible downside target for the aussie is seen around the 94.00 region.

Against the NZ dollar, the aussie slipped to a 2-day low of 1.0706 from Tuesday's closing value of 1.0721. The aussie may test support near the 1.06 region.

Looking ahead, U.K. consumer and producer prices for December are due to be released in the pre-European session at 2:00 am ET.

In the European session, Eurozone final consumer prices for December is slated for release at 5:00 am ET.

In the New York session, U.S. MBA mortgage approvals data, Canada PPI and raw material prices, both for December, U.S. retail sales data, U.S. export and import prices, and industrial production, all for December, U.S. business inventories for November, U.S. NAHB housing market index for January and U.S. Fed Redbook report are set to be published.

At 9:00 am ET, Federal Reserve Vice Chair for Supervision Michael Barr will speak on "Cyber Risk" before the 2nd Annual Massachusetts Institute of Technology/Federal Reserve System Conference on Measuring Cyber Risk in the Financial Services Sector, in Cambridge, Massachusetts, U.S.

At the same time, Federal Reserve Board Governor Michelle Bowman will participate in discussion, "The Path Forward for Bank Capital Reform," before the U.S. Chamber of Commerce Protect Main Street Lending Event, in Washington D.C, U.S.

At 10:15 am ET, ECB President Christine Lagarde speak at 'How to Trust Economics' event at the World Economic Forum held in Davos, Switzerland.

At 3:00 pm ET, Federal Reserve Bank of New York President John Williams will give opening remarks before hybrid event, "An Economy that Works for All: Measurement Matters," at the Federal Reserve Bank of New York.