Drop In Stocks And Commodities Keeps Commodity Currencies Under Wraps
There was little activity in the commodity bloc Monday morning as the usually quiet entry to the week was exacerbated by the disappointing performances on the group’s two complementary drivers: commodities and the demand for high yielding assets.
Acting as a counterbalance to the modest US dollar selling permeating the market, crude prices were relatively unchanged through Monday’s session at $115.21/barrel while gold slipped 0.9 percent to $819.80 through the US pit close. More influential for the high-yielding Aussie and kiwi dollars specifically was the 2 percent-plus drop in US stocks and complementary rise in risk gauges. When the threat of volatility rises while demand for return decreases, the interest rate intensive commodity currencies are usually the first to be liquidated.
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