Commodity Currencies Strengthen Following Trump's Tariff Postponement

Commodity-linked currencies, including the Australian, New Zealand, and Canadian dollars, gained ground against major counterparts during the Asian trading session on Tuesday. The rally followed U.S. President Donald Trump’s decision to delay the planned tariffs on Mexico and Canada after reaching agreements with their respective leaders. The move eased concerns about inflationary pressures that could have prompted the Federal Reserve to maintain higher interest rates for longer.

Trump’s announcement pushed back the implementation of 25% import tariffs on Canadian and Mexican goods by 30 days, averting a potential trade conflict for now. However, uncertainty lingers over how China will react to the newly imposed 10% tariffs set to take effect today.

Market Reactions and Economic Developments

Federal Reserve officials Susan Collins (Boston Fed) and Raphael Bostic (Atlanta Fed) issued warnings on Monday about potential inflation risks stemming from the administration’s trade policies, adding ambiguity to the Fed’s future rate adjustments.

Crude oil prices edged higher as tariffs on Canadian imports threatened North America’s tightly connected oil supply chain. West Texas Intermediate (WTI) crude futures for March rose 0.87% to settle at $73.16 per barrel.

In New Zealand, economic data from Statistics New Zealand showed a 5.6% drop in building permits for December, following a downwardly revised 4.9% increase in November. On a yearly basis, new dwelling approvals declined 9.8% to 33,600.

Currency Performance in Asian Trading

The Australian dollar (AUD) climbed to a four-day high of 96.62 against the yen and advanced to 0.6222 against the U.S. dollar. If its upward momentum continues, resistance may be encountered around 99.00 against the yen and 0.63 against the greenback.

Against the euro and New Zealand dollar, the Aussie gained, reaching 1.6602 and 1.1071, respectively. Further strength could bring resistance levels at 1.64 against the euro and 1.11 against the kiwi.

The New Zealand dollar (NZD) rose to 0.5632 against the U.S. dollar and 87.43 against the yen, with resistance levels seen at 0.59 and 90.00, respectively. The kiwi also edged up to 1.8343 against the euro, with potential upside resistance around 1.81.

The Canadian dollar (CAD) reached a three-week high of 0.8948 against the Aussie and a four-day high of 107.70 against the yen. If the loonie maintains its uptrend, it could face resistance at 0.88 against the Aussie and 109.00 against the yen.

Against the U.S. dollar and euro, the loonie strengthened to 1.4417 and 1.4894, respectively, with resistance expected around 1.39 and 1.47.

Upcoming U.S. Economic Data Releases

Traders will focus on upcoming reports, including U.S. factory orders for December and the U.S. RCM/TIPP Economic Optimism Index for February, due for release in the New York session.