Commodity currencies, what are they?
We all know about the majors and other types of currencies, but there are also those currencies that are referred to as commodity currencies/commodity dollars. Commodity currencies are heavily dependent on the export of certain raw materials. Listed below are the currencies which are raw material dependent.
Canadian Dollar (CAD).
Canadian dollar also nicknamed the loonie is highly dependent on oil since Canada is the second largest exporter of oil, the strength of economy depends on the prices of natural resources. The higher the price of oil the higher the loonie benefits, and the more disadvantaged the Us dollar becomes.
Australian Dollar (AUD).
Australia is one of the biggest producers of Gold, Iron, Aluminium and coal. GDP (Gross domestic products) is accounted for the falling and rising of gold prices. Australian dollar also nicknamed the AUSSIE or OZZIE is also dependent on this commodities, and by the way, trading Audusd is almost the same as trading gold, as the Aud follow the similar pattern to gold.
South African Rand (ZAR).
South Africa is also amongst the producers of Gold, the price of Gold is highly correlated to the price of the country’s currency, so there is a high correlation between Zar and Gold.
New Zealand Dollar (NZD).
New Zealand is not only dependent on one commodity, but a basket of a few. New Zealand is the big exporter of milk, meat and even fruits. New Zealand dollar is also nicknamed Kiwi. Commodity currencies are less liquid as compared to those currencies of the Uk ( GBP) and Japan (Jpy/Yen) or Euro Zone. When the interest rates are higher in Australia or New Zealand than Japan, the investors will then sell the Yen and purchase the Aussie (buy Audjpy) or they will sell the Yen ( Jpy) and purchase Kiwi (Nzd) buy Nzdjpy, they sell the weaker one, anyway this is what we do on the Forex markets, we buy the stronger currencies and we sell the weaker currencies, that is our general rule in Forex markets. here is to knowing a little bit more about the currencies that we trade. Thank you for stopping by, please share the post using share buttons below, more to come on currencies ,stay tuned.