Will Higher Commodity Prices Help the Australian Dollar?

It seems logical to assume that increased demand in the US for commodities would be good for the Aussie but that may not actually turn out to be correct. The AUD/USD has popped up a little today as a result of the shift in investor sentiment but long term moves still look biased to the downside. Increased demand for commodities may seem good for the Australian dollar but will it really last? The Australian economy is more sensitive to Asia than it is to North America. This article will explain why.

Although the AUD is a commodity currency they export much more to China, Japan and even Korea than to the U.S. Economic improvements in Asia are likely to be needed for much improvement in the AUD over the long term.

With a new economic crisis brewing in China, demand is not likely to pick up in the near term. Additionally, from a technical perspective. the AUD/USD is still within its channeling range and a bounce back down from resistance would not be a surprise.

In today's video, I will walk through the variables at play including the technical pattern appearing on the AUD/USD itself. In previous articles, I have discussed the correlation that the Australian dollar has with specific commodities like gold.