Commodity Currencies Hit Multi-Week Lows Amid Weakening Raw Material Prices

Commodity currencies weakened to multi-week lows Wednesday due to falling raw material prices. The yen surged as short sellers exited ahead of a central bank meeting, with the Aussie dollar down 0.5% and the New Zealand dollar hitting a three-month low. Risk aversion drove further drops in industrial metals and currencies.

Commodity currencies slid to multi-week lows on Wednesday as raw material prices weakened, with significant selling against the yen. This currency surged to its highest in two months as short sellers exited ahead of a central bank meeting. The Australian dollar fell 0.5% to $0.6686, nearing chart support levels, and dropped over 1% to 101.79 yen, down nearly 7% in two weeks.

The New Zealand dollar fell 0.6% to a near three-month low of $0.5914, while the Canadian dollar reached a three-month trough of C$1.38 per dollar. These moves mirrored falling prices in industrial metals like iron ore and copper, now at three-and-a-half-month lows due to weak Chinese demand and broader risk aversion following disappointing U.S. earnings.

Although the euro and sterling were steadier, they still hit two-week lows. Rate cuts in future months are anticipated, alongside a potential rate hike in Japan. The yen, best-performing in the G10 this July, rose against many currencies, reflecting market expectations for increased Japanese rates. Attention now turns to upcoming U.S. GDP data and Australian inflation figures.