Rates as of 0600 GMT

 Market Recap

A generally riskon feel in the markets, with most European and US market indices rising yesterday Euro Stoxx 50 1.8, SP 500 1.5, NASDAQ 2.1 and higher commodity prices pushed the three commodity currencies higher yesterday and the safehaven JPY USD lower USD just a little.

Its an interesting question why under these conditions, when industrial metals rose by more than agricultural commodities, did NZD outpace AUD. Oddly enough, NZD has a slightly higher correlation to the Bloomberg industrial metals index than AUD does 0.563 vs 0.536. That difference isnt much, but its huge relative to the amount of industrial metals that New Zealand exports virtually none vs Australia lots and lots. NZD also has a similarly insignificant lead vs AUD in terms of its correlation with the Bloomberg agriculture index 0.338 vs 0.318, which is just as remarkable seeing as 62 of New Zealands exports are edible whereas iron ore coal alone account for 40 of Australias exports.

In other words, it seems that when commodities go up, traders dont bother asking which commodities, they just think commodity currencies and buy.

However, AUD is more closely correlated with global risk appetite aka SP 500 than NZD is 0.772 vs 0.712. Moreover, AUDNZD is more closely correlated with iron ore prices than either AUD or NZD 0.283 vs 0.203 and 0.117. And given that iron ore was up either 0.8 Dailin futures or 4.8 Singapore futures today, that should mean a higher…