Part 108: The Future of Commodity Currencies

~To what extent are the Australian Dollar, Canadian Dollar, and Brazilian Real viable investment targets?~

Introduction

In this era of currency wars, following the "Dollar, Yuan, and Yen" covered in Part 107, this time we focus on commodity currencies. These currencies, which are directly linked to the rise and fall of resource prices, are important for global investors as both "diversification tools" and "sources of return." ⸻

① Australian Dollar (AUD)

• One of the world's largest exporters of iron ore and coal
• Strong correlation with the Chinese economy • Tends to appreciate when resource prices rise, even during rate-cut cycles👉


A currency that allows you to target returns while taking on China risk ⸻

② Canadian Dollar (CAD)

• High dependence on crude oil (WTI/oil sands)
• Strong trade relationship with the U.S., making it susceptible to the U.S. economy • Tends to be relatively strong during periods of Fed rate cuts and a weaker dollar👉 “


North American resource play” as a diversification effect against the dollar is expected ⸻

③ Brazilian Real (BRL)

• Major exporter of coffee, soybeans, iron ore, and crude oil • Often a target for carry trades due to high interest rates • Constant presence of political and fiscal risks👉

High risk, high return

. Has explosive potential during resource cycle upturns ⸻

④ Positioning of Commodity Currencies

Commodity currencies are not just "currencies"; they can be considered financial products that effectively track resource prices. • High resource prices → AUD, CAD, and BRL are bought • Low resource prices → Currency depreciation progresses👉 They are also worth noting as leading indicators for commodity cycles. ⸻

⑤ Investment Strategy

• Diversify into "AUD and CAD" during dollar-weakness phases → Stable commodity currency play • Combine with "Brazilian Real" in bull markets → High yield + resource premium • Achievable via ETFs, foreign currency MMFs, and FX ⸻

Summary

Commodity currencies provide "risks and returns that cannot be captured by the dollar or yen." In particular,
they play a crucial role in boosting overall asset returns during phases when resource cycles turn upward again. 👉 In the era of currency wars,

a strategy of diversifying currencies themselves leads to both asset protection and growth.