Goldman Sachs note that “the academic literature and our own analytical work suggest that terms of trade can be an important driver of FX. We find that changes in export prices have historically had more than twice the impact on exchange rates than that of import prices. In particular, our estimates support a simple rule-of-thumb: a 10% increase in an economy’s commodity export price index results in a 5% appreciation of the currency, while a 10% increase in an economy’s commodity import price index results in a 2% depreciation of the currency.”

• “A lasting implication of the current geopolitical crisis may be a level shift higher in the equilibrium price level for many commodities. Therefore, trades that take advantage of this structural shift - e.g. longs in commodity exporting currencies and shorts in commodity importing currencies - may be appropriate for portfolios already (we issued a long MYR/PHP recommendation on this thesis). Certain other commodity-linked assets, such as CAD and NOK, may also have room to catch up to spot prices as market volatility calms down.”