Commodity currencies hit by falling oil prices, bitcoin near 10-month low

The Australian dollar fell as low as $0.6920, its weakest level since July 2020, after falling 1.7% overnight, which CBA analysts attributed to lower global asset prices.

“The backdrop of increased financial market volatility suggests that the AUD has the potential to fall further against the USD and other major short-term crosses,” they added.

Global equity markets took a beating on Monday, with the Nasdaq falling more than 4% in a sell-off led by growth mega-caps. Meanwhile, oil prices fell about 6%, extending Tuesday’s declines as coronavirus lockdowns in China, the main oil importer, stoked demand concerns.

Lower oil prices also hurt the Canadian dollar, which touched 1.3037 Canadian dollars per dollar, its lowest level since November 2020, and the Norwegian krone touched 9.7184 per dollar, its lowest level since June 2020.

The Dollar Index was stable at 103.7 on Tuesday morning, after rising as high as 104.19 overnight, a new 20-year high. It then lost some ground after Atlanta Fed President Raphael Bostic ended talks of a 75 basis point hike at the Fed’s next meeting.

In recent weeks, markets have priced in a reasonable probability of such a massive rise.

US Treasury yields rose on expectations of the Fed to aggressively rein in inflation, pushing the dollar higher for five straight weeks.

The 10-year benchmark yield fell back below 3% on Tuesday, at 2.9846%.

Bostic’s mild remarks helped the Japanese yen recover a bit from its 20-year low of 131.34 yen per dollar hit overnight. The Japanese currency, which is sensitive to movements in US yields, strengthened a little further on Tuesday to 130.1.

The beaten euro was a fraction higher at $1.0561 and the pound was little changed at $1.2329.

There was also turmoil in the cryptocurrency markets, where bitcoin fell below $30,000 for the first time since July 2021.

The world’s largest cryptocurrency trades largely online with other so-called risk assets, such as tech stocks. It was lately a little firmer around $30,600.

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