Goldman with a nice note that captures much of what I’ve been saying about the low quality of this commodity boom for Australia.
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For years, it was a rock-solid relationship: When commodity prices climbed, thecurrencies of commodity exporters would get a lift, too. But that bond has weakened recently. West Texas Intermediate (WTI) crude has risen 30 percent to more than $100 per barrel since the start of the year, copper has gained 10 percent, iron ore 26 percent, and thermal coal 33 percent. The commodity currencies in G10, meanwhile, appear stuck within a narrow range (Exhibit 1). The Canadian Dollar—our preferred long in G10 this year—sits close to where it stood in March 2021, when WTI prices were running in the low US$60 per barrel range.
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