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.
Clearly the currencies of a number of countries around the world could be called commodity currencies on this very broad definition. For the purposes of currency and commodity trading, the term relates to three major country currencies where a significant contribution to exports comes from commodities.
The Australian dollar, the New Zealand dollar and Canadian dollar are all affected by movements in the price of global commodities, with gold price movements strongly reflected in changes in the Australian dollar, while the Canadian dollar has a strong relationship with the price of crude oil. Meanwhile the New Zealand dollar (or Kiwi), while not linked to a particular commodity like the other two currencies, displays a general correlation with movements in the Commodity Research Bureau (CRB) Index.
When the gold price weakens, what can we expect to see happen? There is likely to be a similar fall in the AUD/USD pair (the Aussie), as all currencies trade in pairs. In effect we are seeing a weakening of the Australian dollar against the US currency, conversely the US dollar is strengthening in that pair. As the global economy comes out of a period of uncertainty, such as after a recession or falling inflation, investors may be more confident and so reduce their safe haven holdings of gold. Currency and commodity traders can see how gold affects the Aussie, and so go short this pair.
Commodities contribute a significant proportion of Australias GDP and over 50% of its exports, with gold and other precious metals making a significant contribution. Trading charts show the very positive correlation of gold with the Aussie, which means a trader can either go for trading gold in the futures market or as an ETF, or follow the AUD/USD pair in the spot forex market.
Observers of the dynamics in currency and commodity trading will be aware of the major role played by Canada as a global commodities producer, particularly in its role as a key producer of crude oil. As such you will see a strong inverse link 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.
When you consider these three currency pairs it's clear why currency and commodity trading followers sense a real opportunity in spot forex trading to capture commodity market movements, whether in gold, crude oil or across the broader commodities universe. With currency trading always providing a bull market, it just comes down to deciding which currency in the pair you are long or short. - 23199
Clearly the currencies of a number of countries around the world could be called commodity currencies on this very broad definition. For the purposes of currency and commodity trading, the term relates to three major country currencies where a significant contribution to exports comes from commodities.
The Australian dollar, the New Zealand dollar and Canadian dollar are all affected by movements in the price of global commodities, with gold price movements strongly reflected in changes in the Australian dollar, while the Canadian dollar has a strong relationship with the price of crude oil. Meanwhile the New Zealand dollar (or Kiwi), while not linked to a particular commodity like the other two currencies, displays a general correlation with movements in the Commodity Research Bureau (CRB) Index.
When the gold price weakens, what can we expect to see happen? There is likely to be a similar fall in the AUD/USD pair (the Aussie), as all currencies trade in pairs. In effect we are seeing a weakening of the Australian dollar against the US currency, conversely the US dollar is strengthening in that pair. As the global economy comes out of a period of uncertainty, such as after a recession or falling inflation, investors may be more confident and so reduce their safe haven holdings of gold. Currency and commodity traders can see how gold affects the Aussie, and so go short this pair.
Commodities contribute a significant proportion of Australias GDP and over 50% of its exports, with gold and other precious metals making a significant contribution. Trading charts show the very positive correlation of gold with the Aussie, which means a trader can either go for trading gold in the futures market or as an ETF, or follow the AUD/USD pair in the spot forex market.
Observers of the dynamics in currency and commodity trading will be aware of the major role played by Canada as a global commodities producer, particularly in its role as a key producer of crude oil. As such you will see a strong inverse link 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.
When you consider these three currency pairs it's clear why currency and commodity trading followers sense a real opportunity in spot forex trading to capture commodity market movements, whether in gold, crude oil or across the broader commodities universe. With currency trading always providing a bull market, it just comes down to deciding which currency in the pair you are long or short. - 23199
About the Author:
The author, William Davies, is a keen observer of commodities and writes 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 @ 4:04 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home