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Commodity currencies start week on a high note

Chris Lee

The world’s commodity currencies found themselves surging ahead in the foreign exchange markets on Monday as the markets continued to fixate on the apparent end of the pandemic lockdown.

The Antipodean currencies, which are the dollars of Australia and New Zealand, surged ahead in the markets as trading for the week got underway.

They were ahead of the US dollar by a fair chunk.

The Aussie dollar was spotted at $0.6971 against the greenback at one stage, which looked to be its best performance since the markets reopened on the day after New Year’s Day.

In New Zealand, the local dollar there was seen at $0.6537, which was its best performance since around the end of January.

New Zealand in particular has come out of the coronavirus crisis in a relatively strong state.

It has now had no active cases of the disease since the end of February.

In a move that has the potential to stimulate economic recovery even further, the country’s government is set to make an announcement on Monday as to whether or not it will relax the domestic lockdown restrictions still in force.

There are believed to be no plans, however, to lift border controls.

The US saw a positive economic data release, meanwhile – though this did not appear to be enough to bolster the dollar or help it recover.

A labour market data release from the country showed that unemployment in the country had gone down over the month of May to 13.3%.

However, despite this, the dollar also fell against other major world currencies over the day.

There are a number of long-term potential hiccups on the horizon for the dollar also.

These include the impact of November’s presidential election, in which Donald Trump is expected to go up against Joe Biden.

The one major saving grace for the dollar, however, was in its pair against the Japanese yen.

The global shift away from safety and towards risk appeared to make the yen, which is the world’s predominant safe-haven currency, one of the worst hit.

In that pair, the dollar saw its best performance in over two months.

News from Japan that its economy went down by a smaller amount than had been expected over Q1 appeared to do little to defend it when it came to dollar trading.

According to analysts, one of the reasons that the dollar has been doing so well against the yen in particular is because in that pair there have been boosts in the value of US Treasury yields.

Next up for the dollar will be a meeting of the US Federal Reserve, which is scheduled to take place on Tuesday and Wednesday.

Elsewhere around the world, the British pound was also on the rise in its pair against the dollar.

The dollar was down by a quarter of a percentage point in this pair as Monday’s global trading got underway.

It was spotted at $1.2705 at one stage, which reflected the worst position for the dollar since the middle of March.

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Chris Lee
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