Commodity Currencies Gain As Oil Prices Plateau And Bargain Hunting Kicks In

Commodity currencies such as the Australian, the New Zealand and the Canadian dollars strengthened against their major rivals in the Asian session on Thursday, as investors went bargain hunting, shrugging off the weak cues from Wall Street overnight as well as the European markets and the relentless slump in oil prices. The Chinese market has ignored a weak start and has moved higher by the mid-session on Thursday.

Oil prices saw some relief after crashing below $27 dollars a barrel on Wednesday. Crude oil for March delivery are currently up $0.05 to $28.40 a barrel.

In economic news, data from the Housing Industry Association showed that new home sales in Australia were down 2.7 percent on month in November. That follows the 3.0 percent decline in October, and marks the third straight month of decline overall.

Data from ANZ Bank showed that confidence among consumers in New Zealand rose in January, rising 2.3 percent to a score of 121.4. That follows the 3.3 percent decline in December to a score of 118.7. It also remains well above the line of 100 that separates optimists from pessimists.

Investors now await the U.S. oil inventories data and the European Central Bank's monetary policy meeting, due later in the day.

Wednesday, the Australian, the New Zealand and the Canadian dollars weakened against their major counterparts due to risk aversion, with worries about global economic growth and further fall in crude oil prices weighing on investor sentiment.

The Australian dollar fell 0.01 percent against the U.S. dollar, 0.60 percent against the yen and 0.68 percent against the euro. The NZ dollar fell 0.32 percent against the U.S. dollar, 0.26 percent against the yen and 1.37 percent against the euro. The Canadian dollar fell 0.68 percent against the U.S. dollar, 0.07 percent against the yen and 1.08 percent against the euro.

In the Asian trading, the Australian dollar rose to a 6-day high of 0.6958 against the U.S. dollar, from yesterday's closing value of 0.6906. The aussie may test resistance near the 0.71 region.

Against the euro and the yen, the aussie advanced to 2-day highs of 1.5621 and 81.64 from yesterday's closing quotes of 1.5758 and 80.76, respectively.

The aussie edged up to 1.0061 against the Canadian dollar, from yesterday's closing value of 1.0016. If the aussie extends its uptrend, it is likely to find resistance around 1.53 against the euro, 84.00 against the yen and 1.01 against the loonie.

The NZ dollar rose to 2-day highs of 1.6788 against the euro and 75.96 against the yen, from yesterday's closing quotes of 1.6928 and 75.18, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 1.63 against the euro and 77.00 against the yen.

Against the U.S. and the Australian dollars, the kiwi advanced to 2-day highs of 0.6476 and 1.0700 from yesterday's closing quotes of 0.6429 and 1.0739, respectively. The kiwi is likely to find resistance around 0.66 against the greenback and 1.05 against the aussie.

The Canadian dollar rose to a 2-day high of 1.5705 against the euro, from yesterday's closing value of 1.5787. The loonie may test resistance near the 1.54 region.

Against the U.S. dollar and the yen, the loonie advanced to 2-day highs of 1.4449 and 81.28 from yesterday's closing quotes of 1.4504 and 80.62, respectively. If the loonie extends its uptrend, it is likely to find resistance around 1.42 against the greenback and 84.00 against the yen.

Meanwhile, the safe-haven yen fell against its major rivals amid rising risk appetite.

The yen fell to 127.70 against the euro and 166.79 against the pound, from yesterday's closing quotes of 127.30 and 165.93, respectively. If the yen extends its downtrend, it is likely to find support around 129.00 against the euro and 170.00 against the pound.

Against the U.S. dollar and the Swiss franc, the yen dropped to 117.47 and 116.79 from yesterday's closing quotes of 116.94 and 116.36, respectively. On the downside, 119.00 against the greenback and 119.00 against the franc is seen as the next support level for the yen.

Looking ahead, the European Central bank will announce its interest rate decision at 7:45 am ET. Economists expect the bank to retain interest rates unchanged at 0.05 percent.

Following the announcement, European Central Bank President Mario Draghi will hold the customary post-meeting press conference at 8:30 am ET.

In the New York session, U.S. weekly jobless claims for the week ended January 16, Federal Reserve Bank of Philadelphia's manufacturing index for January, weekly U.S. crude oil inventories data and Eurozone consumer confidence index for January are due to be released.

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