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Commodity dollars rally despite weakness in commodity prices

FXStreet (Mumbai) - The commodity currencies – AUD, NZD, CAD – rallied against the USD even though the Fed’s dovish tone failed to impress commodities, which are trading in the losses.

The AUD/USD spiked 1.4% to trade around the previous session’s high of 0.7274 levels. Aussie remains resilient despite the drop in the copper prices, which on Comex, dropped more than 0.5%. Meanwhile, the USD/CAD pair dipped 1.2%, even though crude prices weakened more than 1%. The Kiwi also rallied more than 1% against the USD.

The contradictory move in the commodity currencies indicates the latest uptick may be due to drop in the Fed rate hike bets and the currencies stay exposed to fresh sell-off on weak commodity prices and heightened concerns of global growth slowdown.

Euro: On its way to Japanification – SocGen

Research Team at Societe Generale, suggest that Euro has become a 'funding currency' that is liable to appreciate sharply in times of risk aversion and turmoil like the yen.
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