RTTNews - Tuesday in Asia, the Australian and New Zealand dollars slumped against their key counterparts as the stock markets plunged on renewed concerns about the global economy.

On concerns that the global economy will take a fairly long time to recover, investors across the Asia-Pacific region are seen pressing heavy sales today. The World Bank's prediction of a sharper contraction for the global economy had taken a toll of European and U.S. markets on Monday, and it is now the turn of the Asian markets to embark on a journey down south.

With prices of crude oil and commodities tumbling down on fears of a sharp fall in demand, resource-related stocks across Asian markets are taking a hammering today. Stocks from banking, automobile and industrial sectors are also plunging sharply on selling pressure.

Japan's Nikkei 225 was down 3.1% with Australia's S&P/ASX 200 off 3.2%, Hong Kong's Hang Seng Index down 3.4%, Singapore's Straits Times Index off 1.9% and South Korea's Kospi Composite 2.7% lower. New Zealand's NZX-50 was down 1.2%.

Interest rates are 3 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations' assets.

The world economy is struggling with the lingering effects of the collapse of the U.S. housing market last year, with access to credit still tight, companies and consumers reluctant to spend and job losses mounting.

Around the world, governments and central banks have been pouring money into their systems, cutting interest rates to record lows, buying financial assets and building infrastructure to stimulate demand.

The Australian and New Zealand dollars also declined as the oil steepened losses below $67 a barrel today, after a fall of nearly 4 percent the previous day, as renewed worries over the uncertain outlook for major economies sparked a sell-off across global equity markets.

The market awaits U.S. weekly inventory data from the American Petroleum Institute due later and U.S. government figures on Wednesday, for clues on the demand outlook for the world's top energy consumer.

U.S. crude for July delivery expired on Monday, settling down $2.62 at $66.93 a barrel. At 10:54 pm ET, August crude was down $1.02 at $66.48, after settling at $67.50 on Monday, while London Brent crude fell 98 cents to $66.

In Asian deals on Tuesday, the Australian dollar fell to 74.39 against the Japanese yen, the lowest level since May 28. On the downside, the aussie-yen pair may likely target the 73.8 level. At Monday's North American close, the pair was quoted at 75.34.

Australia's currency fell as prices declined for raw materials, which generate more than half of the countries' export earnings.

The Australian dollar is the third-best performer of the world's major currencies in the past three months on expectations that a global recovery would push up commodity prices. Australia is the world's largest shipper of coal and iron ore.

Against the US dollar, the Australian currency slipped to a new multi-week low of 0.7813 during Asian deals on Tuesday. This may be compared to Monday's New York session closing value of 0.7858. The aussie-greenback pair is presently trading at 0.7836 with 0.771 seen as the next target level.

During Asian deals on Tuesday, the Australian dollar tumbled to a 3-week low of 1.2479 against the New Zealand dollar. If the Aussie weakens further, it may likely target the 1.2385 level. The aussie-kiwi pair was worth 1.2515 at Monday's North American session close.

The Australian dollar that closed yesterday's trading at 1.7645 against the euro declined to a multi-week low of 1.7733 in Asian deals on Tuesday. The next likely target for the Australian currency is seen at the 1.785 level.

In Asian trading on Tuesday, the Aussie dropped to a 5-day low of 0.9028 against the Canadian dollar. If the aussie-loonie pair slides further, it may test support around the 0.897 level. The pair closed yesterday's deals at 0.9071.

During Tuesday's early Asian trading, the New Zealand kiwi tumbled to its weakest point since May 28, 2009 against the yen. At about 11:05 pm Eastern Time, the kiwi touched 59.59 against the yen. This may be compared to Monday's New York session closing value of 60.35. If the kiwi slides further, 58.5 is seen as the next target level.

Against its European counterpart, the New Zealand currency declined to a 5-day low during Tuesday's early Asian session. At about 11:05 pm Eastern Time, the NZ dollar touched 2.2131 against the single currency, down from Monday's closing value of 2.2054. The next target level for the New Zealand currency is seen at 2.238.

In early Asian trading on Tuesday, the New Zealand dollar dropped to a 6-day low of 0.6262 against the US dollar. The pair that closed Monday's deals at 0.6294 is now trading at 0.6268. On the downside, the New Zealand currency may likely target the 0.617 level against the buck.

In the upcoming European session, the German July GfK consumer confidence index, Swiss May trade balance, French June consumer confidence index are expected to drive deals.

From U.S., the National Association of Realtors is scheduled to release its report on existing home sales for May at 10 am ET. Economists estimate existing home sales of 4.83 million for the month.

The Federal Reserve Open Market Committee is scheduled to meet today and tomorrow to discuss the near-term direction of monetary policy, and the monetary policy-setting arm of the Fed will make an announcement at 2:15 PM ET on Wednesday.

At its April meeting, the Fed maintained its key fed funds target rate unchanged at a range of 0%-0.25%. The FOMC noted that the economy continued to contract, with the pace of contraction slowing somewhat. Despite the stabilization in consumer spending, the committee noted that spending continued to be constrained by job losses, lower housing wealth and tight credit.

Overall, the central bank is of the view that economic activity is likely to remain weak for a time. That said, the committee expects sustained economic growth will resume gradually due to policy actions, fiscal and monetary stimulus and market forces. Additionally, the fed suggested that inflation may remain below rates that are consistent with economic growth and price stability.

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