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Don't Assume Shorting Commodity Currencies Is One-Way Bet: Standard Life -- Market Talk

5 Mar 2017 11:39 pm

2339 GMT - Although commodity currencies can suffer during Fed rate hiking cycles, there are mitigating factors, says Govinda Finn, a senior strategist at Standard Life Investments. "What's happening in China is important to the commodity price cycle and hence how these currencies trade; currently we expect global activity to strengthen rather than weaken," he says. "Many commodity exporters have already gone through painful adjustments following the earlier collapse in commodity prices, reducing their vulnerability to renewed Fed tightening," he adds. Commodity currencies might fare better than those of emerging market manufacturing exporters if U.S. President Donald Trump takes a more combative approach on trade. This doesn't mean commodity currencies haven't found a local peak after recent appreciation, but it does "caution against assuming that shorting them is a one-way bet." (rachel.pannett@wsj.com; @rachelpannett)

(END) Dow Jones Newswires

March 05, 2017 18:39 ET (23:39 GMT)

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