hr: Currency

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The key to making money in trading is having the ability of predicting what the next move is in the market. However, this is easier said than done.

Veteran forex traders have long known that if one were to become a successful trader of currencies, he or she should look beyond the world of forex, because currencies are moved by a lot of factors. These factors include supply and demand, politics, interest rates, economic growth, etc.

Economic growth and exports are both directly related to the domestic industry of any country. Therefore it is but natural for these currencies to be closely correlated with the commodity prices. There are three major currencies that are closely linked with commodities: the Australian dollar (AUD), the Canadian dollar (CAD) and the New Zealand dollar (NZD).

Other currencies, such as the Japanses yen (JPY) and the Swiss franc, are also affected by commodity prices, but overall possess a weaker correlation, are the Swiss franc (CHF) and the Japanese yen (JPY). Knowing which and why a currency is correlated with a particular commodity can help traders understand and predict certain movements in the market.

If you think commodity currencies trading is for you, it is best to always keep an eye on oil and gold market movements while the other eye should be glued on the currency market - look how quickly the market responds.

Because there will always be a slightly delayed impact of these movements on the currency market, this usually offers an opportunity to plan a broader movement in the commodity market as against the currency market. The thing is, as a currency trader, it is a great advantage to be well informed about commodity prices and how they affect the movement of currencies.

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