Commodity Currencies Fall Amid Rising Risk Aversion

Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major counterparts in the Asian session on Wednesday amid rising risk aversion, as worries about global economic growth continued to weigh on investor sentiment.

Concerns about the health of European banks and the volatility in crude oil prices as well as other commodity prices have increased risk aversion.

Traders also look ahead to Fed Chair Janet Yellen's testimony before the House Financial Services Committee later in the day. Yellen will be grilled on Capitol Hill about the condition of the U.S. economy and outlook for interest rates.

Crude oil prices tumbled on Tuesday amid expectations that global demand for energy products will dwindle this year.

In economic news, the latest survey from Westpac Bank and the Melbourne Institute revealed that consumer confidence in Australia climbed in February, surging 4.2 percent to a score of 101.3. That follows the 3.5 percent decline in January to a reading of 97.3.

Data from the Housing Industry Association showed that the total number of new home sales spiked 6.0 percent on month in December, rising for the first time in four months. New home sales had fallen 2.7 percent in November.

Tuesday, the Australian, the the New Zealand and the Canadian dollars fell against its major rivals as rising concerns over slowing global economic growth and uncertainty over the U.S. Federal Reserve's monetary policy dampened investor sentiment.

The Australian dollar fell 0.22 percent against the U.S. dollar, 0.86 percent against the yen and 1.95 percent against the euro.

The NZ dollar fell 0.10 percent against the U.S. dollar, 0.58 percent against the yen and 1.19 percent against the euro.

The Canadian dollar fell 0.21 percent against the yen and 0.55 percent against the euro. Meanwhile, the loonie rose against the U.S. dollar.

In the Asian trading, the Australian dollar fell to 1.6061 against the euro and 80.47 against the yen, from yesterday's closing quotes of 1.5969 and 81.37, respectively. The aussie may test support near 1.61 against the euro and 79.00 against the yen.

Against the U.S. and the Canadian dollars, the aussie dropped to 0.7039 and 0.978 from yesterday's closing quotes of 0.7069 and 0.9797, respectively. If the aussie extends its downtrend, it is likely to find support around 0.69 against the greenback and 0.96 against the loonie.

The NZ dollar fell to 1.7103 against the euro and 75.58 against the yen, from yesterday's closing quotes of 1.7011 and 76.29, respectively. The kiwi may test support near 1.73 against the euro and 73.00 against the yen.

Against the U.S. and Australian dollars, the kiwi edged down to 0.6609 and 1.0666 from yesterday's closing quotes of 0.6631 and 1.0650, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.64 against the greenback and 1.08 against the aussie.

The Canadian dollar fell to nearly a 3-week low of 1.5725 against the euro, from yesterday's closing value of 1.5657. On the downside, 1.61 is seen as the next support level for the loonie.

Against the U.S. dollar and the yen, the loonie dropped to 1.3913 and 82.17 from yesterday's closing quotes of 1.3865 and 82.99, respectively. If the loonie extends its downtrend, it is likely to find support around 1.43 against the greenback and 79.00 against the yen.

Looking ahead, U.K. industrial production for December is due to be released at 4:30 am ET.

In the New York session, the NIESR U.K. GDP estimate for January and U.S. Federal budget statement for January are due to be released.

At 9:00 am ET, European Central Bank Board member Peter Praet will deliver keynote speech at the "Lender of Last Resort: An International perspective" conference organized by Harvard University in Washington.

At 10:00 am ET, Yellen is expected to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington DC.

At 1:30 pm ET, Federal Reserve Bank of San Francisco President John Williams is scheduled to speak before the 2016 National Interagency Community Reinvestment Conference, "Pathways to Economic Opportunity," in Los Angeles.

The Chinese market continues to remain closed in observance of the week-long Golden Week holidays.