What is Commodity Currency Trading?

What is Commodity Currency Trading? - Commodity trading currency is a small section of the Forex and currency trading, is more specialized, but offer great potential for the dealers who have an interest in the prices of certain commodities, especially oil and gold does.

In foreign exchange markets are 'commodity currencies' currencies of countries whose main exports are raw materials in. As just mentioned, are the single most influential oil and gold, but other commodities other than gold to metals, agricultural products, precious stones, etc. included.

There are a large number of countries around the world, commodity exports are of course, but many of them have smaller currencies, which most dealers do not want to be involved with would. There are only three major commodity currencies: CAD Canadian dollar, Australian dollar AUD and the New Zealand dollar NZD. All of these have sufficient liquidity to make it interesting for forex traders.

As expected, commodity prices, commodity currency values ​​are often closely linked. In the case of Canada, the world's second largest exporter of crude oil is, changes in oil prices the value of the Canadian dollar. In Australia, the major commodity-exporting gold. New Zealand has a larger basket of commodity exports, and so the New Zealand dollar is not related to a product, but has a correlation with the CRB Index, the overall commodity price index.

Each of these currencies can be traded cross-couple with other major currencies, U.S. dollars on a few key or any other major currency for one. However, the influence of commodity prices is particularly strong when you act is a commodity currency against a country is a major importer of the product.

For example, you have the pair USD / CAD, a country heavily on oil imports (U.S.) and is dependent on a country that is a major exporter of oil (Canada). Clearly have a change of oil prices have a huge impact on this particular pair.

Of course, oil is not the only factor in the economies of these countries and you have to take into account other factors such as interest, the political situation. Are you interested in oil as a commodity, but this could be you on the USD / CAD pair with profitable results. What is Commodity Currency Trading?

Another point to keep in mind when currency is always in commodity trading, changes in commodity prices, particularly if they are extreme, are usually have no immediate impact. This means that small fluctuations in oil prices does not necessarily have a significant impact on USD / CAD. The forex market is simply take short-term changes. It is the longer term outlook for commodity prices, which tend to matter. The delay can be useful here, because other things are equal, the currency dealer can give to the market at a good time.

Sun commodity price movements may well add to the equation to be profitable. For commodity traders in particular may prove a move in the currency commodity trade is very lucrative if you remember to take into account other factors that influence the currency market.