Commodity currencies include national currencies of countries, economies of which heavily depend on the production and exports of raw materials. They are countries that export oil, precious metals, wood, and agriculture products. There is a number of countries meeting that criterion, but the most commonly traded commodity currencies are the Canadian dollar, the Australian dollar, and the New Zealand dollar.
The economies of Canada, Australia, and New Zealand depend on exports of raw materials that represent the largest part of their total exports. That is the reason for pairs that include commodity currencies to have high volatility and to be the most liquid ones. As short-term movements of prices for raw materials have no immediate effect on the commodity dollars, they are suitable for long-term trading.
The analysis of price data reveals that raw material prices move in tandem with commodity currency prices. Specialists recommend paying attention to economic releases, interest rates, and the political situation in a country while trading commodity currencies. The success of Forex trading depends heavily on an accurate analysis of all aspects and monitoring of commodity price dynamic.