A:

In forex, the commodity pairs consist of the heavily-traded currency pairs and contain the Canadian, Australian and New Zealand dollars as part of the pairing. The three commodity pairs are: USD/CAD, AUD/USD, NZD/USD. These pairs are highly correlated to commodity fluctuations in the world markets and are the most heavily traded commodity pairs in forex.

Forex traders often trade these commodity pairs to gain exposure to commodity (especially oil) volatility. Although there are many countries with large natural resource and commodity reserves, such as Russia, Saudi Arabia and Venezuela, the commodities of many of these nations are usually highly regulated by their domestic governments or are thinly traded. The Canadian, Australian and New Zealand dollars are traded at high volumes and are therefore very liquid in the forex market.

For more, see Canada's Commodity Currency: Oil And The Loonie.

This question was answered by Lovey Grewal.

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