G10 Commodity Currencies Surge Amid Global Rate Hike Bets
The Australian dollar, Norwegian krone, and New Zealand dollar have emerged as the top-performing G10 currencies, rising approximately 6%, 5%, and 4% year-to-date, respectively. This surge is driven by traders adjusting global interest rate expectations, anticipating that major economies may shift from rate cuts to combating inflation. The Reserve Bank of Australia has initiated a new tightening cycle, with its trimmed mean inflation rate climbing to 3.4%, suggesting another rate hike in May. Similarly, Norway is expected to raise rates in response to higher inflation, while the New Zealand dollar benefits from anticipated rate hikes.
The strengthening of these commodity currencies is further supported by rising oil and copper prices. Analysts highlight that Australian interest rates have surpassed U.S. rates for the first time since 2017, attracting funds to economies with strong fiscal positions and commodity exposure. Despite expectations of two to three Fed rate cuts this year, some institutions predict the Fed may maintain current rates, fueling discussions of a potential "new hawkish era."
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