Becoming a Pro Trader: Master the Forex Market – Part 7
Intermarket correlations
| If | Then | Why |
|---|---|---|
| Gold UP | USD DOWN | During times of economic unrest, investors tend to dump the dollar in favor of gold. Unlike other assets, gold maintains its intrinsic value. |
| Gold UP | AUD/USD UP | Australia is the third biggest gold producer in the world, sailing out about $5 billion worth a year. |
| Gold UP | NZD/USD UP | New Zealand (rank 25) is also a large producer of gold. |
| Gold UP | USD/CHF DOWN | Over 25% of Switzerland’s reserves are backed by gold.As gold prices go up, the pair moves down (CHF is bought). |
| Gold UP | USD/CAD DOWN | Canada is the 5th largest producer of gold in the world. As the gold price goes up, the pair tends to move down (CAD is bought). |
| Oil UP | USD/CAD DOWN | Canada is one of the top oil producers in the world. It exports around 2 million barrels of oil a day to the U.S. As oil prices go up, the pair moves down. |
| Gold UP | EUR/USD UP | Since both gold and the euro are considered “anti-dollars,” if the price of gold goes up, EUR/USD may go up as well. |
| Bond yields UP | Local Currency UP | An economy that offers higher returns on its bonds attracts more investments. This makes its local currency more attractive than that of another economy offering lower returns on its bonds. |
| Dow DOWN | Nikkei DOWN | The performance of the U.S. economy is closely tied with Japan. |
| Nikkei DOWN | USD/JPY DOWN | Investors consider the yen as a safe haven and tend to seek it during periods of economic distress. |
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