Commodity prices move G10 FX - Nomura

Most commodity prices have gained momentum since the US presidential election, though they had already been supported by the recovery in the Chinese economy before the US election notes research team at Nomura.

Key Quotes

“Many commodity prices tend to be more sensitive to the Chinese economy, and its economic trend will be important for the relative value of G10 FX. If the Chinese economy improves even amid higher US interest rates, we estimate JPY will be the clear underperformer, while the commodity currencies, AUD, NZD, NOK and CAD, are likely outperform. In contrast, the combination of higher yields with a Chinese economic slowdown would weaken commodity currencies more than JPY.”

“Among the commodity currencies AUD and NZD are more sensitive to China-driven commodity prices, while CAD is less sensitive. It is also worth noting that USD is becoming less sensitive to commodity price movements.”