Explore how price movements in crude oil, gold, and industrial metals directly drive exchange rates for the CAD, AUD, and NOK.
What Are Commodity Currencies?
In foreign exchange markets, currencies of nations whose economic exports rely heavily on natural resources are classified as Commodity Currencies. Primary examples include the Canadian Dollar (CAD), Australian Dollar (AUD), and Norwegian Krone (NOK).
Because export earnings fluctuate directly with global raw material prices, commodity market movements exert a strong influence on foreign exchange exchange rates.
Crude Oil and the Canadian Dollar (CAD)
Canada possesses the world's third-largest proven oil reserves and is a major crude oil exporter to the United States. When global crude oil prices surge, Canada's export revenues increase dramatically, driving demand for Canadian Dollars.
Frequently Asked Questions
Why is the Australian Dollar tied to iron ore and gold?
Australia is the world's largest exporter of iron ore and coal, and a top gold producer. Rising metals demand from industrial economies boosts Australia's trade surplus and strengthens the AUD.