Commodity currencies led gains across major foreign-exchange markets as Black Friday trading revealed growing conviction that Chinese authorities will unveil fresh stimulus measures, boosting risk appetite despite seasonal dollar strength. The Australian and New Zealand dollars both strengthened notably, while the Canadian dollar drew support from firming energy prices as investors recalibrated positions ahead of December's central bank meetings.
Market participants say the moves reflect a broader rotation away from defensive positioning that dominated earlier in November. Traders note that speculative positioning data shows hedge funds have begun trimming long-dollar bets against commodity-sensitive currencies for the first time in six weeks. The shift comes as iron ore and copper futures posted their strongest weekly performance since September, fueled by expectations that the People's Bank of China may cut reserve requirement ratios as early as mid-December. "The narrative has pivoted from US exceptionalism to Chinese policy responsiveness," said a senior G-10 currency strategist at a major European bank. "That's creating a more constructive backdrop for cyclical currencies."
Gold continued its methodical ascent, with momentum indicators flashing bullish signals as the metal tests technical resistance zones that have capped rallies since October. The advance reflects both safe-haven demand amid escalating tensions in the South China Sea and structural buying from central banks diversifying reserves. In contrast, the euro and pound traded within recent ranges against the greenback, with EUR/USD holding near multi-month highs while GBP/USD struggled to maintain upward traction despite hawkish rhetoric from Bank of England officials. Options markets suggest traders are positioning for heightened volatility around the December Fed meeting, with implied volatility premiums rising for one-week to one-month tenors.
Looking ahead, strategists say year-end rebalancing flows could amplify currency moves in the coming weeks, with pension funds and asset managers likely to adjust hedges as equity markets approach record territory. The divergence between commodity currencies and majors like the euro may widen further if Chinese data next week confirms manufacturing sector stabilization. Meanwhile, crude oil's breakout from a three-month consolidation pattern is lending support to the Canadian dollar and Norwegian krone, though traders warn that OPEC+ production policy remains a wildcard. Geopolitical risks continue to simmer, with markets monitoring developments in Eastern Europe and the Middle East for potential flight-to-safety flows that could temporarily disrupt the prevailing risk-on tone.
Disclaimer: This analysis is AI-generated for educational purposes. Traders should verify all information and conduct their own research before making trading decisions.