As of January 14, 2025, commodity currencies, including the Australian, New Zealand, and Canadian dollars, have shown notable strength against major currencies, reflecting a growing risk appetite in the markets. This shift comes in response to President-elect Donald Trump's economic team's cautious stance on potential tariff hikes, which has reassured investors [0189f986].
On the same day, crude oil prices also surged, with West Texas Intermediate Crude futures for February closing up $2.25 at $78.82 a barrel, further bolstering the outlook for commodity-linked currencies [0189f986]. The Australian dollar, in particular, reached a one-week high of 1.6553 against the euro and a four-day high of 97.70 against the yen, indicating a positive market reaction [0189f986].
However, despite the overall strength in commodity currencies, Australia's consumer confidence has taken a hit, with the Westpac-Melbourne Institute Consumer Sentiment Index declining by 0.7% to 92.1 in January [0189f986]. This decline raises concerns about domestic economic stability even as external factors appear favorable.
In contrast, the New Zealand dollar rose to a nearly one-month high of 1.8262 against the euro, and the Canadian dollar reached a six-day high of 1.4364 against the U.S. dollar, showcasing a broader trend of recovery among commodity currencies [0189f986]. Meanwhile, the U.S. dollar weakened against major currencies, falling to four-day lows against the euro, pound, and Swiss franc, which may reflect shifting investor sentiment [0189f986].
The interplay between these developments suggests that while commodity currencies are currently benefiting from a favorable international environment, domestic economic indicators, such as consumer confidence, will be crucial in determining their long-term stability and strength [0189f986].