Commodity currencies in the Forex market

Commodity currencies in the Forex market

Currency price in the world market is determined by many components , including the economic, political and other factors. Some states have such a strong presence in the global market , the currency of these countries is seen in the international community on special conditions. Currencies of countries called the forex market trade . You already had to ask – What is a commodity currency and why is it called so?

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Commodity currencies (commodity currencies) are Canada (CAD), Australia (AUD) and New Zealand (NZD). Consider the commodity currencies and the specifics of the economic development of these countries.
The strength of the economy , in this case defined the export of goods to other countries that have a large and stable demand . This and precious metals, and agricultural products , oil and gas. Three countries (Canada, Australia and New Zealand) have as its currency the dollar , but , respectively, in each country has his own. These dollars are called in Forex trade dollars (commodity dollars), which means , of course the currency of these countries . Often written as an abbreviation comdolls. For these countries, exports of certain types of raw materials – the main and decisive moment for a stable economy. Therefore the increase in prices of exported goods or raw materials , be sure to improve the position of commodity dollar countries . If commodity prices fall , then there is a decline of commodity dollar. This direct relationship commodity prices and commodity dollar is called correlation.

Commodity currencies in the Forex market

The main currency pairs (major currency pairs) in the foreign exchange market – is the Canadian dollar (CAD), New Zealand Dollar (NZD) and Australian Dollar (AUD) in relation to the U.S. dollar and vice versa. To be successful in the Forex market , a good idea to explore the commodity currencies very carefully .

Let’s start with Canada

The country is famous for the oil fields , which are second only to the oil fields of Saudi Arabia. Oil is in high demand on the world market , no wonder it’s called ” black gold .” The convenient geographical position of Canada has made it the largest exporter of oil. And the biggest importer of oil in Canada is the United States of America. The proximity of the exporter and importer , the acute shortage of oil made ​​their trade union welcome and long-term . Therefore, the global foreign exchange market is so sensitive to the changes in the currency pair USD / CAD. These changes occur in the inverse ratio – increasing the price of oil has a beneficial influence on the Canadian dollar, but the dollar falls . When reducing the price of crude oil increases the U.S. dollar. This is called the inverse correlation ( relationship ) between oil prices and the exchange rate on the foreign exchange market forex pair USD / CAD.

Since 1988, the inverse correlation between the currency pair USD / CAD was 68 %. During the period from 2003 to 2005, the correlation between oil prices and the exchange rate was 80 %. This is a serious performance and strong mutual relationship . Knowledge of all the changes and forecasts can be of further assistance for determining the exchange rate of currency rates USD / CAD.

The second country – this is Australia

Australia has a unique geographical location , rich gold deposits , so the stability of the Australian economy has arisen due to the export of gold jewelry . Gold exports account for half of all exports. Of gold producers Australia is the third largest in the world. Fluctuations in gold prices and the exchange rate USD / AUD were more dependent on each other than we have seen in the export of oil . Moreover, almost equally varied price of gold and exchange currency Australia.

From 1980 to 2006 clearly discernible correlation . First, I was the price of gold , and a little while later , the exchange rate has changed . This is a good tool for those who are seriously working on the Forex market. The exclusion and violation of the correlation can be observed in 2005 – 2006 years. Then a sharp increase in the price of gold has not produced changes in the exchange rate , currency jump was not, though many were ready for correlation. Future projections show the possibility of leveling course , his gradual climb. The currency pair AUD / USD and gold prices in Australia are in direct correlation. Violation of the last direct correlation with time should level off , but most of all, gradually , without abrupt jump.

Third country  – this is New Zealand

New Zealand exports a lot of goods and products. These include , dairy products, and wool. Export goods are as timber, fish , meat and other products. Highlight something of diverse exports impossible. None of any of the prevailing commodity or product, therefore , to determine the exchange rate index used by the Bureau of Commodity Research (Commodity Research Bureau CRB Index). The index is an indicator of global inflation , represents a basket of major export commodities. CRB index and the exchange rate NZD / USD has a direct relationship ( correlation) .

Statistical data showed 60 % correlation for the years 1990 to January 2006.Otmetim proximity of New Zealand and Australia, which is very beneficial for mutual cooperation. Data for many years may be useful for people who are willing to calculate the change in exchange rates . Analyzing the New Zealand dollar trade and the index CRB, you can build further predictions for the Forex market and prices.

In the end, we got a little extra knowledge about the commodity currencies and the Commodity Dollars New Zealand, Canada and Australia. Now you understand that the three countries because of its geographical location and the presence of deposits were able to get a stable society and the economy . But in order to predict the quotes in the Forex market , you can not forget that the forecasts for the leading commodity currencies do better in the long term . Prices for raw materials and products may change due to many reasons , even political . 100 % of the changes can not be foreseen . However, the knowledge economy of the countries of the favorable and unfavorable aspects of the development will be a great help in the investigation and serious analysis .

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