Commodity currencies such as the Australia, the New Zealand and the Canadian dollars weakened against their major rivals in the Asian session on Wednesday, as the investor sentiment dropped after the release of weak economic data from china and amid worries of the U.S. debt ceiling possibly facing opposition from some Republicans who were seeking bigger spending cuts, potentially prolonging the process of passing the bill.

Weakness in energy and mining stocks amid tumbling commodity prices also weighed on the sentiment.

Data from National Bureau of Statistics showed that the manufacturing sector in China continued to contract in May, and at a faster rate. That missed expectations for a score of 51.4 and was down from 49.2 in April.

The bureau also said the non-manufacturing index came in with a score of 54.5, again missing forecasts for 54.9 and down from 56.4 in the previous month. The composite index had a score of 52.9, down from 54.4 a month earlier.

In the U.S. debt ceiling deal, the agreement in principle will raise the debt ceiling for two years and keep non-defense spending roughly flat for fiscal 2024 and increase it by 1 percent in fiscal year. The deal will be sent to the full House for a vote, likely to take place later in the day.

In economic news, data from the Reserve Bank of Australia showed that the private sector credit in Australia was up 0.6 percent on month in April, accelerating from 0.2 percent in March. On a yearly basis, credit climbed 6.6 percent.

Data from the Australian Bureau of Statistics showed that the total value of construction work done in Australia was up a seasonally adjusted 1.8 percent on quarter in the first quarter of 2023, coming in at A$57.686 billion. That beat forecasts for an increase of 1.5 percent following the 0.3 percent contraction in the three months prior.

On a yearly basis, construction work done improved 5.1 percent.

Data from ANZ showed that New Zealand's business confidence index rose to -31.1 points in May from -43.8 points in April. Economists had expected a rise to -43.4 in May.

In the Asian trading today, the Australian dollar fell to nearly a 7-month low of 0.6489 against the U.S. dollar, a 2-week low of 90.74 against the yen and a 5-day low of 1.6508 against the euro from yesterday's closing quotes of 0.6517, 91.10 and 1.6464, respectively. If the aussie extends its downtrend, it is likely to find support around 0.64 against the greenback, 88.00 against the yen and 1.67 against the euro.

Against the Canadian dollar, the aussie edged down to 0.8849 from yesterday's closing value of 0.8859. The aussie may test support near the 0.87 area.

The NZ dollar fell to nearly a 7-month low of 0.5999 against the U.S. dollar, nearly a 3-week low of 83.86 against the yen and nearly a 4-week low of 1.7832 against the euro, from yesterday's closing quotes of 0.6034, 84.49 and 1.7754, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.58 against the greenback, 81.00 against the yen and 1.81 against the euro.

Against the Australian dollar, the kiwi edged down to 1.0824 from yesterday's closing value of 1.0780. On the downside, 1.09 is seen as the next support level for the kiwi.

The Canadian dollar fell to 5-day lows of 1.3641 against the U.S. dollar and 102.47 against the yen, from yesterday's closing quotes of 1.3601 and 102.76, respectively. If the loonie extends its downtrend, it is likely to find support around 1.38 against the greenback and 100.00 against the yen.

Against the euro, the loonie edged down to 1.4612 from yesterday's closing value of 1.4599. The next possible downside target for the loonie is seen around the 1.48 area.

Looking ahead, German import prices for April is due at 2:00 am ET. Half-an-hour later, Switzerland retail prices for April is slated for release.

In the European session, Germany's unemployment rate for May and Switzerland economic sentiment for May are set to be released.

In the New York session, U.S. MBA weekly mortgage data, Germany's preliminary inflation rate for May, Canada GDP rate for the first quarter, U.S. Chicago PMI for May, U.S. Dallas Fed services index for May and U.S. Federal Reserve Beige book report are due.

At 8:30 am ET, Christine Lagarde President of the European Central Bank will participate in Q&A session with high-school students at the final award ceremony of the Generation €uro Students' Award competition 2023, in Frankfurt, Germany. Twenty-minutes later, Federal Reserve Bank of Boston President Susan Collins and Federal Reserve Board Governor Michelle Bowman will give opening remarks before hybrid "Fed Listens" event to discuss challenges and opportunities following the disruptions of the COVID-19 pandemic, in Boston, U.S.

At 12:30 pm ET, Federal Reserve Bank of Philadelphia President Patrick Harker will participate in fireside chat on the global macroeconomy and monetary conditions before the Official Monetary and Financial Institutions Forum, in Philadelphia, U.S.

One-hour later, Federal Reserve Board Governor Philip Jefferson will deliver a speech virtually on "Financial Stability and the U.S. Economy" to the 22nd Annual International Conference on Policy Challenges for the Financial Sector, in Washington D. C., U.S.

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