Every Forex Trader Should Know Some Interesting Currency and Commodity Relationships

Global Forex market is the world’s spacious financial market where currencies of different countries are exchanged for making profits or for achieving conspicuous goals. A good forex trader should be aware of various macro and microeconomic developments and their impact on different currency values. Actually, trading complicates successfully predicting future currency exchange rate changes and positioning themselves to advantage from that. Online Commodity Tips

 

The relationship between currencies and commodities is one of those forex trading majors that every trader should know. The influence of some most traded and followed commodity value changes and the influence of those on economies, trade relationships and currency exchange rates are also very enthralling too. Here are some famous currency-commodity relationship instance and explanations.

 

Australian Dollar and Gold Relationship: Over the past decennary, gold and Australian Dollar (AUD) has shown more than 80 percent deterministic relationship. That means, when the value of gold rises, AUD also experiences an equivalent price appreciation. This is because Australia is the 3rd, 2nd according to some neoteric studies, largest generator of gold. AUD is also one of the most traded currencies in the world forex market.

 

Entertainingly, though not a major producer of gold, New Zealand Dollar (NZD) also shows a very high straightforward correlation to gold price changes. This is because New Zealand and Australia have very powerful trade relationships and Australia is the main location for New Zealand exporters. Also, price appreciation of other valuable metals and agricultural commodities undoubtedly affect the value of currencies of nations who are the spacious producer or exporter of the commodities. But most of these price changes won’t make any considerable impact on global forex market because the lack of liquidity for external currency pairs and because most of these commodity price changes are very successive.

 

Crude Oil and Canadian Dollar Relationship: Like AUD-gold relationship, Canadian Dollar (CAD) and crude oil price transformation show a positive correlation over more than 80 percent. Like Australia in gold, Canada is the 7th, 6th pursuance to some new stats, volumetric producer of oil and also is the 2nd largest oil reserve in the world. Canada is the most considerable oil supplier to the United States, the spacious economy in the world.

 

United States Dollar (USD) also shows good pronounced correlation to oil price changes. This is because USD is the currency used worldwide to complete oil price and to trade oil. Online Commodity Tips

 

Japanese Yen and Oil Relationship: Contrary to CAD and USD relationship to oil values, Japanese Yen (JPY) shows a privative correlation to oil price changes; that is when the oil price panegyrizes, then Yen value depreciates. This is because Japan needs to import nearly all oil they need from other countries. Evidently Science Articles, CAD/JPY pair is regarded as the most susceptive pair with regard to oil price changes.

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