Will The FED Lift Commodity Currencies AUDUSD And NZDUSD?

Commodity currencies AUDUSD, NZDUSD, Brazilian Real and Indonesian Rupiah are facing downward pressure once again. While USDCAD is facing an upward pressure due to the US Dollar getting strong. Now as a currency trader, we are only interested in trading AUDUSD, USDCAD and NZDUSD. The most important questions for this week: Will the FED FOMC Meeting this week come to their rescue?

Australian exports are dependent on iron ore, New Zealand relies on dairy products and energy makes up the bulk of Canadian, Brazilian and Indonesian exports. Therefore, a sharp tumble in prices of energy, gold, dairy and metals combined with a stronger dollar, a weakening Chinese economy and bets on looser monetary policy – excluding Brazil where rates remain high – have seen commodity bears out in full force in recent weeks.

Federal Reserve is not likely to announce an interest rate hike in this week’s FOMC Meeting. But the FOMC Meeting minutes give give clues to the market what the FED is planning ahead. A cautious note by FED Chairperson Janet Yellen means respite for the commodity currencies. And a bullish tone indicating a rate hike coming soon  will crush these currencies. So keep your fingers crossed when you are trading these currencies during this week.

Australia’s currency has had one of the most rapid depreciations of its real exchange rate, only beaten by a ragged bunch of troubled economies.