Commodity Prices and Forex Trading
Trading currencies require more fundamental analysis knowledge than trading any other financial instrument; for profiting one should be aware of macro and micro economic changes. Rise and fall in commodity prices also plays a role in increasing and decreasing of currency pair prices. There are many currencies which show greater correlation (either positive or negative) with commodity prices.
One very good example for this is the oil price changes. Generally, increase in crude oil prices will boost up the economies of oil exporting countries like Canada and middle-east counties and slow down the economies of oil importing countries like Japan, USA and others. Any fall in crude oil prices will produce an opposite effect. The same phenomenon is evident with gas exporting and importing nations.
The price changes of agricultural and metal commodities also produce some effects. For example the rise of gold prices will increase the value of currencies which are backed up with gold (eg: Swiss franc) and currencies of countries which exports gold (eg: Australian Dollar). Similarly good agricultural growth will greatly enhance a countries total economic growth.
The smaller the economy of a country the greater will be the effect of related commodity price changes. More important thing to note is as the economies of nations are inter-related any change of one countries economy will produce a positive or negative effect on other country. One very good example of this high correlation is Australian Dollar and New Zealand Dollar.
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One very good example for this is the oil price changes. Generally, increase in crude oil prices will boost up the economies of oil exporting countries like Canada and middle-east counties and slow down the economies of oil importing countries like Japan, USA and others. Any fall in crude oil prices will produce an opposite effect. The same phenomenon is evident with gas exporting and importing nations.
The price changes of agricultural and metal commodities also produce some effects. For example the rise of gold prices will increase the value of currencies which are backed up with gold (eg: Swiss franc) and currencies of countries which exports gold (eg: Australian Dollar). Similarly good agricultural growth will greatly enhance a countries total economic growth.
The smaller the economy of a country the greater will be the effect of related commodity price changes. More important thing to note is as the economies of nations are inter-related any change of one countries economy will produce a positive or negative effect on other country. One very good example of this high correlation is Australian Dollar and New Zealand Dollar.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
5:08 AM
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