Bank of America Global Research notes that a range of metrics suggest commodity FX is only tentatively factoring in the possibility of a commodity super cycle.
"Correlations are at the higher end of historical ranges, symptomatic of strong demand expectations. The undervaluation gap, skew premium and short positioning have all meaningfully narrowed but these moves may have further to run if the commodity price rally proves sustainable . Near-term, we are most constructive on NOK that has the most hawkish central bank and benefits from lagged normalization in Europe," BofA notes.
"Longer-term, the AUD may benefit from green/digital transitions given its available reserves of key commodities such as copper, lithium and cobalt. The China commodity impulse and associated indicators remain key over 2021," BofA adds.