Review Currency and Commodity Trading Techniques, Target Gold, Oil and CRB Currency Pairs Alternatives
As a keen trader if you study currency and commodity trading you will discover that it relates to the currencies of countries where commodities contribute a significant proportion of economic output as well as exports. These could be metals like copper, or crude oil, or agricultural products like sugar and coffee.
It would of course be correct to call the currencies of a number of countries around the world commodity currencies if we use a very wide description. For keen followers of currency and commodity trading however, the term refers to three major countries where commodities represent a substantial component of output and exports.
Movements in global commodity prices affect the Australian, New Zealand and Canadian dollar currencies, with the Australian dollar reflecting gold price movements strongly, while the crude oil price seems to have a close relationship with movements in the Canadian dollar (CAD). Though it is not linked to any particular commodity like the other two currencies, the New Zealand dollar (NZD) or "Kiwi" shows a general correlation with price changes in the Commodity Research Bureau (CRB) Index.
Let's consider what happens as gold strengthens? We can expect to observe a similar rise in the AUD/USD pair (the Aussie), as all currencies trade in pairs. This equates to a strengthening of the Australian dollar versus the US dollar, or put it another way, the US dollar is weakening in that pair. The onset of economic uncertainty in the global economy, such as recession or rising inflation, prompts investors to move into gold as it is regarded as a safe haven. Currency and commodity traders will also see how gold links to the Aussie, and trade this pair instead.
Australia gets a significant percentage of its output from commodities and over 50 per cent of its exports are from this source, with gold, other precious metals and copper playing a big role. Take a look at trading data to see the strongly positive correlation of the Aussie and gold. This means a switched-on trader can either trade gold futures or an ETF, or gain 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 its role as a strategic crude oil producer. This leads to the inverse correlation observed between crude oil price changes and the movement of the USD/CAD (the Loonie) pair.
The USA is the worlds largest consumer of oil and its biggest supplier is its next door neighbour Canada. While a high crude oil price is good for the Canadian dollar it is negative for both the US economy and US dollar. If a trader is bullish about crude oil prices they could go long on the Canadian dollar in the forex market, instead of buying oil ETF's or Nymex crude futures.
Looking at all three of these currency pairs gives currency and commodity trading followers a real opportunity to choose spot forex trading as a way of capturing the movements in the commodity markets, either for gold, crude oil or across the whole spectrum of commodities. There is always a bull market in currency trading, it just depends which currency in the pair you are long or short. - 23212
It would of course be correct to call the currencies of a number of countries around the world commodity currencies if we use a very wide description. For keen followers of currency and commodity trading however, the term refers to three major countries where commodities represent a substantial component of output and exports.
Movements in global commodity prices affect the Australian, New Zealand and Canadian dollar currencies, with the Australian dollar reflecting gold price movements strongly, while the crude oil price seems to have a close relationship with movements in the Canadian dollar (CAD). Though it is not linked to any particular commodity like the other two currencies, the New Zealand dollar (NZD) or "Kiwi" shows a general correlation with price changes in the Commodity Research Bureau (CRB) Index.
Let's consider what happens as gold strengthens? We can expect to observe a similar rise in the AUD/USD pair (the Aussie), as all currencies trade in pairs. This equates to a strengthening of the Australian dollar versus the US dollar, or put it another way, the US dollar is weakening in that pair. The onset of economic uncertainty in the global economy, such as recession or rising inflation, prompts investors to move into gold as it is regarded as a safe haven. Currency and commodity traders will also see how gold links to the Aussie, and trade this pair instead.
Australia gets a significant percentage of its output from commodities and over 50 per cent of its exports are from this source, with gold, other precious metals and copper playing a big role. Take a look at trading data to see the strongly positive correlation of the Aussie and gold. This means a switched-on trader can either trade gold futures or an ETF, or gain 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 its role as a strategic crude oil producer. This leads to the inverse correlation observed between crude oil price changes and the movement of the USD/CAD (the Loonie) pair.
The USA is the worlds largest consumer of oil and its biggest supplier is its next door neighbour Canada. While a high crude oil price is good for the Canadian dollar it is negative for both the US economy and US dollar. If a trader is bullish about crude oil prices they could go long on the Canadian dollar in the forex market, instead of buying oil ETF's or Nymex crude futures.
Looking at all three of these currency pairs gives currency and commodity trading followers a real opportunity to choose spot forex trading as a way of capturing the movements in the commodity markets, either for gold, crude oil or across the whole spectrum of commodities. There is always a bull market in currency trading, it just depends which currency in the pair you are long or short. - 23212
About the Author:
The author, William Davies, is a seasoned observer of commodities and pens articles for an educational online resource on trading commodities. Learn more about how you could benefit from currency and commodity trading in the world markets.
posted by X - Men @ 11:10 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home