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Australian Dollar Drops On Rising Risk Aversion

The Australian dollar slipped against its major counterparts in the Asian session on Tuesday, as most Asian shares fell following the negative cues overnight from Wall Street on waning optimism about a near-term interest rate cut by the Federal Reserve and reflecting a notable drop by shares of Apple and Boeing.

Investors remained cautious as they look ahead to the U.S. Federal Reserve Chairman Jerome Powell's congressional testimony later this week for clues on monetary policy.

Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.

Survey data from the National Australia Bank showed that Australia business confidence weakened in June after rising sharply in May.

The business confidence index fell 5 points to +2 in June and the decline was broad-based across industries.

The aussie fell to near a 2-week low against the greenback and a 6-day low of 1.6122 against the euro, from its early highs of 0.6975 and 1.6078, respectively. The next possible support for the aussie is seen around 0.68 against the greenback and 1.65 against the euro.

The aussie reversed from its early highs of 0.9137 against the loonie and 1.0527 against the kiwi, dropping to near a 3-week low of 0.9112 and a 5-day low of 1.0493, respectively. If the aussie drops further, it may locate support around 0.90 against the loonie and 1.03 against the kiwi.

After rising to a 5-day high of 75.91 against the yen at 8:30 pm ET, the aussie reversed direction and declined to 75.63. On the downside, 72.00 is possibly seen as the next support level for the aussie.

Looking ahead, Canada housing starts for June and building permits for May are scheduled for release in the New York session.

Federal Reserve Chairman Jerome Powell will give opening remarks at an event hosted by the Federal Reserve Bank of Boston at 8:45 am ET.

Federal Reserve Bank of St. Louis President James Bullard is set to speak at the Official Monetary and Financial Institutions Forum Meeting in Saint Louis at 10:10 am ET.

At 2:00 pm ET, Federal Reserve Governor Randal Quarles will deliver a speech about stress testing at an event hosted by the Federal Reserve Bank of Boston.

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