The Relationship Between Commodities and the Australian Dollar.
Australia’s currency is often called a “commodity currency” because its value is closely tied to the prices of key exports like iron ore, coal, and natural gas. When global demand for these resources rises, export earnings increase, and the Australian dollar typically strengthens. Conversely, when commodity prices fall, the dollar often weakens.
This link means that traders, investors, and even everyday Australians can fel the impace of global commodity swings. From super fund returns to the cost of imported goods. Undestanding this relationship helps explain why economic news from China or the U.S. can quikcly affect the Aussie dollar.