Commodity Currencies

In today's lesson, we will be taking a look at commodities and how they relate to commodity currencies.

What is a commodity currency?

In this crazy trading universe we call the Forex, a commodity currency is a currency whose country's exports are largely comprised of raw materials (precious metals, oil, agriculture, etc.).

There are dozens of countries that fit this description, but the most actively traded currencies are the New Zealand Dollar, Australian Dollar, and the Canadian Dollar. Because their currencies are all called dollars, they are also known as the commodity dollars or "Comdolls" for short.

These three currencies are among the major currency pairs, which mean they have great liquidity and volatility for active trading.

How do commodities affect commodity currencies?

Raw materials compose such a large portion of these countries exports, a rise in commodity prices can possibly lead to a rise in the value of a country's currency, and vice versa.

Let's take a look at the major commodity currencies and see how much their movement correlates to certain commodities...