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The correlation between forex, oil and gold To anticipate forex price fluctuations, professional currency traders take a look at what’s going on beyond the world of currencies. Exchange rates are influenced by many factors – supply and demand, politics, interest rates, economic growth, etc. The three main currencies that are correlated with commodities are the Australian dollar, the Canadian dollar and the New Zealand dollar. The Swiss franc and the Japanese yen are also correlated with commodity prices, but the link is not as strong. Forex traders can therefore analyze these correlations to understand and anticipate foreign exchange market movements. In this article, we will examine currencies that are correlated with oil and gold in order to show you how to use this information in your trading. As of this writing, many countries are experiencing a recession and the evolution of commodity prices can mean the difference between a deep recession and a fast recovery.
Exchange rates are influenced by the prices of commodities, so forex traders should monitor their prices in order to make more informed forex trading decisions. Oil is a commodity all over the world – at least for now – as most developed countries cannot survive without oil. A drop in oil prices is a nightmare for oil producers, but for oil consumers it represents greater purchasing power. Canada is a major exporter of oil, it is therefore severely affected by lower oil prices, while Japan, which is a major importer of oil, tends to benefit from this sort of situation.
On a daily basis, the correlation is not always as tight, but it increases in the long term, because the Canadian dollar has good reason to be sensitive to oil prices. Canada is the seventh largest producer of crude oil in the world, and its oil production is steadily increasing. In 2000, imports of oil from Canada to the U. CAD, the correlation is therefore inverted. CAD can be greatly affected by how American consumers react to changes in oil prices. Japan is especially sensitive to changes in oil prices due to its lack of domestic energy resources and the need to import large quantities of oil, natural gas and other energy resources. JPY’s price action, with a visible lag.
In theory, when the price of an ounce of gold rises, the Australian dollar also goes up. The Swiss currency also has a strong link with gold. CHF goes down and vice versa, when the price of gold falls, the pair also falls. Swiss currency is backed by gold reserves. Trade Forex and CFDs on Stock Indices, Oil and Gold.
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