Commodity Currencies Regain Ground. Will It Last?

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Commodity Currencies Regain Ground. Will It Last?

The New Zealand dollar got a strong boost in recent trading, thanks to the 0.25% interest rate increase implemented by the Reserve Bank of New Zealand. During the event, the NZD/USD currency pair jumped from the .8450 area to the .8550 minor psychological resistance. This was still a pretty decent rally, considering that interest rate hike expectations have already been priced in earlier in the week.

Recall that NZ Prime Minister John Key recently reiterated that interest rates should return to normal levels sooner rather than later, adding pressure to the central bank to tighten monetary policy. In this week’s rate decision, the RBNZ decided to increase their benchmark rate from 2.50% to 2.75%.

Also getting a boost in today’s trading session is the Australian dollar, which benefitted from a better than expected employment change report. For February, the economy was able to add 47.3K jobs, stronger than the estimated 15.3K increase, while the previous month’s figure was upgraded to 18.0K. This was enough to keep the country’s jobless rate steady at 6.0% and to boost AUD/USD back above the .9000 handle.

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Commodity Currencies Outlook

The Canadian dollar had its fair share of gains in recent trading, as USD/CAD slipped below the 1.1100 handle. There have been no major reports released from Canada recently and there are none due in today’s US session, as traders are all eyes and ears on the US retail sales release. The headline figure is slated to show a 0.3% increase while the core figure might print a 0.2% uptick.

Oil prices are still enjoying upward pressure, as Russia has threatened to restrict oil supply. Meanwhile, gold and other precious metals are being supported by the risk off market environment. With that, the positively correlated commodity currencies are also able to draw support from current conditions.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com