Commodities: Major role in the FX arena – FXStreet

By FXStreet Ross Burland, Editor and Analyst at FXStreet.com, explains the major role of commodities in the FX space.

Key Quotes

“Professional forex traders have long known that trading currencies requires looking beyond the world of FX and commodity prices remain one of the main drivers in the FX space for this year. While exports and economic growth are directly correlated to a country’s domestic industry, it is natural for some currencies to be heavily correlated with commodity prices.

The American, Australian, Canadian, New Zealand dollar, Swiss Franc and Yen are the most popular correlations. In the FX space, oil, gold and dairy are the current focus among traders and have been offering plenty of volatility in recent years and driving subsequent price impacts on the respective currency. US oil, for example, surged from $60 a barrel in 2006 to a high of $147.27 a barrel in 2008 before plummeting back below $40 a barrel in the first quarter of 2009 and rising to $116 in 2011.

Then, in 2014, the glut kicked in and we have seen a steady decline in the price of oil to a low a level as $26.03 for this year so far, reflecting weaker growth prospects in emerging …read more

Source:: FX Street