Commodity Currencies Slide As Oil Price Rally Loses Steam

Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major counterparts in the Asian session as the price of oil reversed course. Investors also remain cautious ahead of monetary policy statements by the U.S. Federal Reserve and the Bank of Japan later in the week.

Crude oil for March delivery are currently down $0.53 at $29.81 a barrel. Oil prices tumbled as investors fear oversupply in the market.

Monday, the NZ dollar fell 0.49 percent against the U.S. dollar, 0.93 percent against the yen and 0.47 percent against the euro. The Australian dollar fell 0.61 percent against the U.S. dollar and 0.45 percent against the euro, while it held steady against the yen.

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

In the Asian trading, the Australian dollar fell to a 5-day low of 1.5650 against the U.S. dollar from yesterday's closing value of 1.5598. The aussie may test support near the 1.60 region.

Against the U.S. dollar and the yen, the aussie dropped to 5-day lows of 0.6934 and 81.90 from yesterday's closing quotes of 0.6954 and 82.26, respectively. If the aussie extends its downtrend, it is likely to find support around 0.68 against the greenback and 79.00 against the yen.

The NZ dollar fell to a 5-day low of 0.6425 against the U.S. dollar, 75.89 against the yen and 1.6889 against the euro, from yesterday's closing quotes of 0.6449, 76.29 and 1.6792, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.63 against the greenback, 73.50 against the yen and 1.73 against the euro.

Against the Australian dollar, the kiwi edged down to 1.0797 from yesterday's closing value of 1.0771. The kiwi is likely to find support around the 1.09 area.

The Canadian dollar fell to a 5-day low of 1.4300 against the U.S. dollar, from yesterday's closing value of 1.4289. The loonie is likely to find support around the 1.45.

Against the yen and the euro, the loonie dropped to 4-day lows of 82.60 and 1.5519 from yesterday's closing value of 82.76 and 1.5503, respectively. If the loonie extends its downtrend, it is likely to find support around 79.00 against the yen and 1.59 against the euro.

The loonie edged down to 0.9939 against the Australian dollar, from an early high of 0.9909. On the downside, 1.01 is seen as the next support level for the loonie.

Looking ahead, Swiss trade data for December is due to be released in the pre-European session at 2:00 am ET.

At 5:45 am ET, Bank of England Governor Mark Carney will testify on the Financial Stability Report before the Treasury Select Committee, in London.

In the New York session, Markit's flash U.S. service sector PMI report, U.S. consumer confidence index and U.S. Richmond Fed manufacturing index, all for January and U.S. S&P/Case-Shiller home price index for November are slated for release.