The Commodity Currency Playbook: How to Trade the AUD, NZD, and CAD in the 2025 Supercycle

In the vast and interconnected world of foreign exchange, not all currencies are created equal. While some are driven by interest rate differentials or safe-haven flows, a unique and powerful trio moves to the rhythm of a different drum: the beat of global commodities. The Australian Dollar (AUD), the New Zealand Dollar (NZD), and the Canadian Dollar (CAD)—collectively known as the “commodity currencies” or “commdolls”—are inextricably linked to the raw materials their nations export to the world.

For forex traders, this provides a unique analytical edge. Understanding the outlook for key commodities like iron ore, oil, and dairy products can unlock powerful insights into the future direction of these currencies. As we move through 2025, whispers of a new “commodity supercycle”—a prolonged period of rising prices driven by structural supply deficits and resilient demand—are growing louder. This environment, fueled by the green energy transition, infrastructure spending, and a potential rebound in global manufacturing, could set the stage for a period of sustained strength in the commdolls. This guide provides a detailed playbook for understanding and trading the AUD, NZD, and CAD in this dynamic landscape.

The Australian Dollar (AUD): China’s Industrial Pulse

The Australian Dollar is, for all intents and purposes, a liquid proxy for the health of the Chinese economy. Australia is a resource powerhouse, and its single most important export is iron ore—the primary ingredient in steel production. The vast majority of this iron ore is shipped to one country: China.

• The Core Driver: When China’s economy is firing on all cylinders, its demand for steel to build skyscrapers, bridges, and infrastructure is immense. This drives up the price of iron ore and, in turn, boosts Australian export revenues, creating strong demand for the AUD. Conversely, when China’s economy sputters, as seen in its recent property sector crisis, iron ore prices fall, and the AUD suffers.
• How to Track It: To trade the AUD effectively, you must become a quasi-expert on China. Forget just looking at an AUD/USD chart; you need to be watching the price of iron ore futures on exchanges like the Dalian Commodity Exchange. Pay close attention to Chinese economic data, particularly the Caixin Manufacturing PMI (Purchasing Managers’ Index), industrial production figures, and any government announcements regarding infrastructure stimulus. Positive surprises in these data points are often directly bullish for the AUD.
• The 2025 Play: The key question for the AUD in 2025 is whether the Chinese government will successfully stabilize its economy and stimulate growth. If Beijing unleashes a significant wave of infrastructure spending to offset weakness in the property market, it could reignite demand for iron ore and send the AUD soaring. Watch for AUD/JPY as a key barometer—this pair combines Australia’s commodity story with the Bank of Japan’s monetary policy, making it highly sensitive to shifts in global risk appetite and growth expectations.

The New Zealand Dollar (NZD): The Global Risk Barometer

While its larger neighbor is tied to hard commodities, the New Zealand Dollar, or “Kiwi,” is primarily driven by soft commodities, specifically whole milk powder. New Zealand is the “Saudi Arabia of milk,” dominating the global dairy trade.

• The Core Driver: The price of dairy is a significant factor for the NZD. The bi-weekly Global Dairy Trade (GDT) auction is a market-moving event for Kiwi traders, with the price index acting as a key sentiment indicator. A strong auction result signals robust global demand and is bullish for the NZD.
• Beyond the Farm: More so than the AUD, the NZD is also acutely sensitive to global risk sentiment. Because of its smaller, more open economy, the Kiwi is seen as a high-beta currency. When global investors are optimistic and buying riskier assets (the “risk-on” environment), the NZD tends to rally strongly. When fear takes over and investors flee to safety (risk-off), the NZD is often one of the first and hardest currencies to be sold.
• The 2025 Play: Trading the Kiwi requires a dual focus. Monitor the GDT auction results for the fundamental story, but also keep a firm pulse on broad market sentiment. Is the S&P 500 rallying? Are global bond yields stable? This is typically a positive environment for the NZD. A great pair to watch is AUD/NZD. This cross-rate pits the hard commodity story of Australia against the soft commodity and risk sentiment story of New Zealand, often creating clear, technically-driven trends based on the relative performance of their core economic drivers. If iron ore is outperforming dairy, AUD/NZD is likely to rise.

The Canadian Dollar (CAD): The Oil-Driven “Loonie”

The Canadian Dollar, nicknamed the “Loonie” after the bird on its one-dollar coin, marches to the beat of black gold. Canada is one of the world’s largest oil producers and exporters, with the vast majority of its exports flowing directly to its southern neighbor, the United States.

• The Core Driver: The price of crude oil, specifically the West Texas Intermediate (WTI) benchmark, is the single most important driver for the CAD. When oil prices rally, it dramatically increases the value of Canada’s exports, strengthens its terms of trade, and boosts the Loonie. When oil prices fall, the CAD almost always weakens in sympathy. The correlation is one of the strongest and most reliable in the entire forex market.
• The US Connection: The CAD is also uniquely tied to the health of the US economy. Because the two economies are so deeply integrated, strong economic growth in the US often spills over into Canada, providing an additional tailwind for the Loonie. This makes US jobs data, consumer spending, and growth figures almost as important for the CAD as Canadian domestic data.
• The 2025 Play: The outlook for oil is the central pillar for any CAD strategy. Factors pointing to higher oil prices—such as OPEC+ production cuts, rising geopolitical tensions in the Middle East, or a stronger-than-expected rebound in global travel and manufacturing—are all fundamentally bullish for the CAD. A key pair to trade this theme is USD/CAD. Because both the US and Canadian central banks often move in rough synchronization, major moves in this pair are often driven by significant divergence in oil prices. A sustained rally in WTI above $90 or $100 per barrel would likely exert immense downward pressure on USD/CAD.

Conclusion: A Thematic Approach to Trading

Trading the commodity currencies offers a refreshing alternative to focusing solely on interest rate speculation. It allows traders to build a thesis based on tangible, real-world supply and demand dynamics. The key to success is specialization. Choose one of the commdolls and immerse yourself in its unique ecosystem.

Build a dashboard that tracks not just the currency pair, but its core commodity driver (Iron Ore, GDT prices, or WTI). Follow the key economic data from its primary trading partner (China for AUD, Global Risk for NZD, the US for CAD). By understanding these fundamental relationships, you can move beyond simply reacting to price wiggles and begin to anticipate major trends, positioning yourself to profit from the powerful currents of the next commodity supercycle.