An analysis of currencies and commodities trade the sharp dealer refers to the currencies of countries whose economic production and later export are mainly raw materials, such as raw materials such as aluminium, oil and gold and agricultural products such as sugar, soya or livestock.
Although it would not be wrong to refer to many world currency such as commodity currencies, this is not the intention when traders use this description. Those who follow currency and commodity trade trends, however, use the term to describe the three major countries in which raw materials an important role in both the economic output if the output play.
A look at trade charts will learn how changes in global commodity prices seem correlated to the Canadian, Australian and New Zealand dollar coins, with the Australian dollar, a very good proxy for gold price movements and the price of crude oil price seems to correlate closely with movements in the Canadian dollar (CAD). Unlike the other two commodity currencies, the New Zealand dollar (NZD) or "Kiwi" does not seem to be associated with a particular raw material, but rather shows a close correlation with price changes in the broader measure of Commodity Research Bureau (CRB) Index.
Let's consider what happens when gold strengthened? We can expect to observe a similar increase in the AUD/USD pair (the Aussie), as all currencies trade in pairs. This equates to a strengthening of the Australian dollar against the US dollar, or put it another way, the u.s. dollar is weakening in that pair. The beginning of the economic uncertainty in the global economy, such as recession or soaring inflation, asks investors to gold as it is considered a safe haven. Currency and commodity traders will also how Golden links to the Aussie, and instead this pair trade.
Australia Gets a significant percentage of the export of raw materials and more than 50 percent of exports from this source with gold, other precious metals and copper play a major role. Take a look at trade data to see the strong positive correlation of the Aussie and gold. This means a switched-on trader can trade gold futures or an ETF, or exposure to AUD/USD in the spot forex market.
Market data will show the keen observer of currency and commodity trading the significant part played in the global commodities market by Canada, especially when it comes to her role as a strategic crude oil-producer. This leads to the inverse correlation observed between the changes in the price of crude oil and the movement of the pair USD/CAD (Loonie).
Canada is a major oil supplier to the United States, which in turn neighbour consumes more oil than any other economy. A low crude oil price would be bad news for the Canadian dollar, but positive for both the u.s. economy and the u.s. dollar. Every merchant bearish on the Outlook for crude oil prices as a proxy can go short the Canadian dollar in the Forex market, instead of short or inverse ETF in Nymex crude oil is going to buy.
Knowing how these three currencies are closely linked to raw materials, we can see why currency and commodity trading in spot forex trading takes observers their chance to take advantage of commodity market movements, or in crude oil, gold, or more in General about the commodity spectrum. There is always a bull market in currency trading, so decide what you are long or short in your chosen currency pair.
0 comments:
Post a Comment