BNY: Softer Fed hasn't sparked sustained commodity FX bid

A less hawkish Federal Reserve has taken some pressure off the US dollar, but the shift has not translated into a durable bid for commodity currencies, according to BNY’s Geoff Yu. The Norwegian krone, Australian dollar and emerging-market units such as the Chilean peso, South African rand and Brazilian real have all failed to see sustained upside.

Yu attributes the muted response to growth constraints that are capping carry appeal. Softer Fed pricing may reduce dollar strength, but weak domestic and global growth prospects limit the room for commodity FX to rally.

The comments suggest currency traders are reluctant to chase commodity-linked FX despite the improved interest-rate backdrop, keeping the group rangebound rather than breaking higher.