LONDON, April 17 – The renewed conflict in the Middle East is sharpening attention on how commodities are reshaping global geopolitics, lifting resource‑linked currencies such as Norway’s krone, Canada’s dollar, Australia’s dollar and New Zealand’s dollar against major peers. The Norwegian krone and Australian dollar have each risen more than 7% against the U.S. dollar so far this year, during one of the most disruptive periods for global energy supplies in decades.
Commodity currencies gain as energy security takes centre stage
The outperformance reflects a broader shift toward energy and resource security as global trade fragments under strategic rivalry between the United States and China. Economists say currencies tied to energy, metals and other raw materials are increasingly seen as relatively stable in a changing financial landscape.
Kabra, a strategist at a major European bank, said his firm cut its euro exposure and reallocated equally across the four main commodity currencies once hostilities began. He highlighted a previous disconnect between strong commodity prices and weaker related currencies, arguing that this leaves room for further appreciation.
Van Biljon, a portfolio manager at a global investment firm, said she positioned for gains in Norway’s krone versus sterling, citing Norway’s growing role as a key oil and gas supplier to Europe after the region reduced its dependence on Russian energy. Rabobank, in a recent note, projected further euro weakness against the krone, which is trading near 9.37 per dollar, its strongest level since 2022.
AAA exporters seen as alternatives to major reserve currencies
Australia, Canada and Norway, all AAA‑rated energy exporters, are increasingly being treated by traders as alternatives to the U.S. dollar, euro and Chinese yuan in a world more dependent on critical raw materials. Analysts say this marks a broader reshaping of currency valuation, driven by access to commodities needed for the energy transition and for artificial intelligence infrastructure.
Research from asset manager Ninety One describes the emergence of a new global commodity order, shaped by regionalised energy markets, accelerating electrification and growing resource scarcity. The firm said broad commodity indices have climbed about 42% this year, citing BofA Research, far above the roughly 6% annual gain recorded in 2025.
Oil prices have hovered near $100 a barrel since the Iran flare‑up, copper has touched six‑week highs, and gold remains about 50% above year‑earlier levels despite a recent pullback. Kabra said the U.S. government’s decision to designate copper as essential to national security underscores the tightening links between raw materials and global policy.
Conflict risks and safe‑haven flows temper gains
Despite the strength of commodity currencies, risks remain. A prolonged conflict could drag on global growth, while safe‑haven demand has periodically boosted the U.S. dollar. The Canadian, New Zealand and Australian dollars initially sold off during the escalation, but later rebounded as ceasefire talks gained traction.
Rosengren, an analyst at RBC BlueBay Asset Management, warned that Australia could still come under pressure because it relies heavily on imported refined oil, despite being a major exporter of coal and liquefied natural gas. She said energy independence and security are now central drivers of near‑term currency performance.
Luu of Russell Investments said energy‑exporting countries with stable political systems, such as Norway and Canada, are well placed to hold their strength if oil trades in a range of $85 to $100 a barrel rather than closer to $65. He said his firm continues to hold exposure to these currencies within a diversified global strategy.
Koenig, head of global foreign exchange at a European asset manager, added that commodity‑linked currencies tend to perform well in both periods of unrest and calm because they respond quickly to changes in risk appetite. According to him, these currencies usually benefit when risk sentiment improves and trade volumes normalise.
Physical commodities reshape views on where value is stored
The outperformance of commodity currencies marks a clear departure from assets priced mainly on financial or digital protocols. Their value is closely linked to the production and sale of physical goods that underpin the global economy.
The U.S. Energy Information Administration has sharply raised its 2026 forecast for Brent crude, now expecting an average of $96 per barrel, up significantly from its projection earlier this year. That higher price path supports revenue streams for key exporters, reinforcing demand for their currencies.
This backdrop is prompting a reassessment of where value is stored during periods of geopolitical tension, especially as central bank policies diverge.
Policy divergence adds another layer of support
Derivatives markets suggest the Reserve Bank of Australia will keep its policy rate near 4.5% by the end of 2026, while the Bank of Canada’s rate is expected to be much lower, around 2.3%.
For the Australian dollar, policy expectations are being shaped by the International Monetary Fund’s revised inflation forecast of 4.0% for 2026, above the rate projected for most advanced economies. That could force the RBA to maintain a tighter stance for longer.
In contrast, the Bank of Canada has held its policy rate at 2.25% since January and has signalled a willingness to look through supply‑side price shocks, as long as longer‑term inflation expectations remain anchored.
In Norway, policymakers have slightly cut their 2026 forecast for non‑oil GDP growth to 1.8%, acknowledging that a global slowdown could eventually weigh on exports even as high energy prices boost revenue in the short term. Norges Bank has indicated it may raise rates to between 4.25% and 4.50% by year‑end to tackle inflation that remains above its 2% target.
Trader positioning reveals split views on key currencies
Positioning data adds a further lens to market sentiment. Figures from the Commodity Futures Trading Commission show a sizeable net long position in the Australian dollar, which has been building for several months.
By contrast, speculative traders have moved to a net short of about $2.4 billion in the Canadian dollar, signalling a clear divide in expectations between the two major commodity‑linked currencies, even as both continue to be shaped by the same powerful forces of geopolitics, energy prices and shifting global supply chains.
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