Correlation AUD vs Commodities 29-May-2016

The oil price is bounce back in 2016, where we see US$48 for WTI crude oil price, and it was around $37 at the end of 2015.
More remarkably, the gold price have been upward trend since early this year, where XAU/USD is 1220, and it was around 1062 at the end of 2015.

Australian dollar (AUD) is historically correlated with commodity price as commodity trade is one of their major export. The below figure shows 3 month correlation AUD vs Crude oil and AUD vs XAU respectively.

As seen there, those correlations have positive values, particularly with XAU. Although RBA cut the interest rate and AUD got weaken, AUD is fundamentally strong from the point of commodity price.
XAU is usually bought against USD when uncertainty is anticipated. US is having the presidential election which could be an uncertain factor (geo)politically.
Recovery of the oil price also support increasing commodity price.
Australia has kept the highest ratings, AAA (S&P), Aaa (MDY) and AAA (Fitch), which are evaluated in stable.
AUD has been sold for last 3-4 years due to their monetary policy, but it has fundamentally very positive perspectives.

Back to the correlation matter, currently 3 month correlation shows -10.0% in AUD vs XAU and -19.0% in AUD vs Crude oil. As seen in historical data, those correlations are likely to bounce back to highly positive territory soon or later. As far as the upward trend of commodity price keep ahead, AUD is expected to be upward trend, too.

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