Commodity currencies hit by tumbling oil prices, Bitcoin near 10-month low

Falling commodity prices dragged the Australian and Canadian currencies lower on Tuesday, although the dollar was steady against most other majors while Bitcoin continued to tumble.

The Aussie dollar dropped as low as $0.6920, its weakest since July 2020, having fallen 1.7% overnight, which analysts at CBA attributed to declines in global asset prices.

“The backdrop of heightened financial market volatility suggests AUD can potentially fall further against the USD and other major crosses in the near term,” they added.

Global share markets took a battering on Monday with the Nasdaq dropping more than 4% in a sell-off led by mega-cap growth stocks.

Meanwhile, oil prices fell around 6%, extending declines on Tuesday as coronavirus lockdowns in China, the top oil importer, fed worries about demand.

Lower oil prices also hurt the Canadian dollar, which touched C$1.3037 per dollar, its weakest since November 2020 and the Norwegian crown touched 9.7184 per dollar,its lowest since June 2020.

The dollar index was steady at 103.7 on Tuesday morning, having risen as high as 104.19 overnight, a fresh 20-year peak.

It later lost some ground after Atlanta Fed President Raphael Bostic hosed down talk of a 75-basis points at the Fed’s next meeting.

In recent weeks, markets have priced in a reasonable chance of such a massive hike.

US Treasury yields have climbed on expectations the Fed will aggressively tamp down inflation, which has caused the dollar to rise for five straight weeks.

The benchmark 10-year yield edged back under 3% on Tuesday to 2.9846%.

Bostic’s moderate remarks helped the Japanese yen recover a little from a fresh 20-year low of 131.34 yen per dollar hit overnight.

The Japanese currency, which is sensitive to moves in US yields, strengthened a little more on Tuesday to 130.1.

The beaten down euro was a fraction higher at $1.0561 and sterling was little changed at $1.2329.

There was also excitement in crypto markets, where Bitcoin fell below $30,000 for the first time since July 2021.

The world’s largest cryptocurrency is trading largely inline with other so called risk assets, such as tech stocks.

It was last a little firmer around $30,600.