The commodity currencies are benefiting from both a broad Dollar weakness, as well as an increase in risk appetite amid renewed optimism about a potential trade deal. Traders are now wondering if this is the start of a proper recovery rally or just a short-term bounce. The two events that could determine this are the speech by Fed Chair Jerome Powell and the on-going trade talks between the US and China.
Should Powell show his dovish side again, the pressure on the Greenback may increase, which would then benefit the commodity currencies. Further progress in the trade talks could also boost risk appetite.
New Zealand Dollar
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US equities continue to welcome any high-risk event being put in the rear-view mirror – especially when rates markets look prime to consolidate lower