The US dollar gave up some of Monday’s gains as a sharp slide in crude oil prices reduced risk appetite. The dollar edged lower against the Japanese yen, which was firmer on safe-haven appeal. By late Asian session, the greenback fell to 117.32 yen, down from an earlier session high of 118.02 yen. The euro also got off to a stronger footing on Tuesday, climbing to 1.0894 dollars from an earlier low of 1.0840 dollars. Sterling was the exception as it slipped to 1.4517 against the greenback.
Shares in Asian markets were mostly in negative territory despite a late rebound on Wall Street on Monday. Tokyo’s Nikkei 225 index plunged by 2.7% today after trading resumed following yesterday’s national holiday. But shares in China attempted to recoup some of Monday’s losses, with the CSI 300 index posting a 0.7% gain.
A higher fixing of the Chinese yuan by the People’s Bank of China helped provide some calm to the markets as concerns linger over the extent of the slowdown in China’s economy. The yuan’s midpoint was set 2 pips higher today at 6.5628 yuan per dollar, while the offshore yuan continued to close the gap between the onshore value, which had widened recently, and moved higher at 6.5857 yuan per dollar.
There was no respite for crude oil prices, which headed lower for yet another day. Oversupply and fears about growth in China continued to weigh on prices. US crude futures fell to a new 12-year low of $30.39 a barrel before rising slightly to $30.56 in late Asian trading. This brings the total losses in 2016 to date to 18%.
The Canadian dollar touched near 13-year lows on the ongoing weakness in oil prices. The US dollar was up at 1.4260 against the loonie in late Asian session. The Australian and New Zealand dollars were also dragged lower by falling commodity prices and were down at 0.6950 and 0.6526 against the greenback respectively.
Coming up later today, UK industrial and manufacturing figures and the JOLTS job openings in the US will be the main data of the day. But a number of speeches, including from the Bank of Japan’s Kuroda, the ECB’s Praet, the Bank of England’s Carney and the Fed’s Lacker are also likely to attract some attention.
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