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Analysts at Nordea Markets suggest that on light of negative bias on risk appetite, they are sticking to their bearish view on commodity FX for now.

Key Quotes

“Another way to showcase why commodity FX could face a tough summer is via the typical lag-time in the Chinese impulse on industrial metal prices.  Tailwinds are clearly fading for industrial metals and e.g. the AUD may suffer as a consequence.  The latest oil supply news also the support the idea that the tailwinds will fade for oil related FX. And when the CAD has failed to capitalize on a materially higher oil price, what will then happen, if the oil price momentum fades again? Via the same logic we are also sceptical towards the NOK short-term. We though expect Norges Bank to re-underpin the NOK later this summer.”

“And while this may not be the most sophisticated analysis in the history of FX strategists,  our keep-it-simple trade idea on EUR/PLN has played out nicely so far.  Poland (and Hungary) are high beta currencies to Euro area (and in particular German) performance. So when the tide turns on the Euro area momentum, it usually spills over to weaker PLN (and HUF) after a while. With the Euro area surprise index as depressed as now, EUR/PLN could see more upside over the coming 1-2 months.”