Commodity Currencies Decline On Expectations For Further Global Contraction

The Commodity dollars declined against many of the majors today following US and European news that pointed to further economic slowdowns and thus, additional declines in demand for commodities. If economic activity declines or remains near current levels, prices on crude and other commodities will lose the support of projected demand increases that had propped them up for some time. In this regard, while the Canadian, Australian, and New Zealand countries are among the first to show signs of a recovery from the global crisis, a sharp drop in commodity prices could sharply alter conditions. As such, if global contraction continues and demand for basic materials declines, the currencies could continue to take a hit.

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