Commodity Currencies Rise Amid Risk Appetite

Commodity currencies such as the Australian, the New Zealand and the Canadian dollars strengthened against their major counterparts in the Asian session on Tuesday influenced by risk appetite, as crude oil prices rose above the $50 mark in Asian trades. Investors are also digesting the minutes of the Reserve Bank of Australia's monetary policy meeting held earlier in October, when the central bank kept the benchmark lending rate unchanged.

Crude for November delivery is currently up by 0.27 percent or $50.21 per barrel. The crude oil prices slipped following signs that Iran will pick up the slack when Saudi Arabia and Russia curb output. Meanwhile, traders expect the oil market is not likely to be oversupplied.

Meanwhile, the Australian dollar rose after the release of RBA minutes.

Members of the Reserve Bank of Australia's monetary policy board expect the Australian economy to see a gradual slowing in the short term before recovering, minutes from the bank's October 4 meeting revealed. There remains a high degree of uncertainty in the domestic labor and housing markets, the minutes showed.

The economists see no significant change in the outlook for inflation. So the prospects for a rate cut at the November board meeting are remote.

The NZ dollar rose following the release of upbeat CPI data.

Data from Statistics New Zealand showed that consumer prices in New Zealand were up 0.2 percent on quarter in the third quarter of 2016. That exceeded forecasts for a flat reading following the 0.4 percent increase in the second quarter.

On a yearly basis, consumer prices added 0.2 percent versus expectations for 0.1 percent and down from 0.4 percent in the three months prior.

Traders also await the Global Dairy Trade auction, due later in the day.

Speaking to Citi's 8th Annual Australian & New Zealand Investment Conference in Sydney, the Reserve Bank of Australia Governor Philip Lowe said that he expects inflation rate to again edge up to its target range over the next couple of years. Also, there is a need to guard against inflation expectations falling too far, he said.

In other economic news, data from the Australian Bureau of Statistics showed that the total number of new motor vehicle sales in Australia was up seasonally adjusted 2.5 percent on month in September, coming in at 100,640. That follows the downwardly revised flat reading in August. Monday, the Australian dollar held steady against its major rivals.

The NZ dollar rose 0.11 percent against the U.S. dollar, 0.16 percent against the yen and 0.40 percent against the euro.

The Canadian dollar showed mixed trading against its major rivals. While the loonie rose against the euro and the yen, it held steady against the U.S. dollar.

In the Asian trading, the Australian dollar rose to a 10-month high of 1.4360 against the euro and a 2-week high of 0.7675 against the U.S. dollar, from yesterday's closing quotes of 1.4417 and 0.7628, respectively. If the aussie extends its uptrend, it is likely to find resistance around 1.42 against the euro and 0.77 against the greenback.

Against the yen and the Canadian dollar, the aussie advanced to 4-day highs of 79.68 and 1.0047 from yesterday's closing quotes of 79.23 and 1.0010, respectively. The aussie may test resistance around 81.00 against the yen and 1.02 against the loonie.

The NZ dollar rose to nearly a 4-week high of 1.5303 against the euro and an 8-day high of 1.0622 against the Australian dollar, from yesterday's closing quotes of 1.5410 and 1.0691, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 1.51 against the euro, and 1.05 against the aussie.

Against the U.S. dollar and the yen, the kiwi advanced to near 2-week highs of 0.7189 and 74.63 from yesterday's closing quotes of 0.7133 and 74.09, respectively. The kiwi is likely to find resistance around 0.73 against the greenback and 75.00 against the yen.

The Canadian dollar rose to more than a 2-week high of 1.3083 against the U.S. dollar, from yesterday's closing value of 1.3127. On the upside, 1.29 is seen as the next resistance level for the loonie.

Against the yen and the euro, the loonie advanced to 79.34 and 1.4416 from yesterday's closing quotes of 79.11 and 1.4438, respectively. If the loonie extends its uptrend, it is likely to find resistance around 80.00 against the yen, and 1.43 against the euro.

Looking ahead, U.K. consumer price, producer price, retail price indexes for September and house price index for August are due to be released at 4:30 am ET.

In the New York session, Canada manufacturing sales data for August, U.S. CPI data for September and NAHB's U.S. housing market index for October are slated for release.

At 8:00 am ET, New Zealand's Global Dairy Trade auction is due to be held.

At the same time, European Parliament's Brexit negotiator Guy Verhofstadt is expected to speak at conference on future of EU budget, reform of EU institutional set-up, in Brussels.

At 9:00 am ET, European Commission First Vice-President Frans Timmermans is expected to speak at the General Affairs Council meeting, in Luxembourg.