Top Commodity Currency Pairs: Forex Trading Insights

Commodity pairs is a term used in the Forex market to denote traded currency pairs that are tied to a certain commodity. Usually, oil and gold are the most commonly traded commodities. Some currency pairs perform better than others. Here are some of the most noteworthy commodity tied- currency pairs.

US Dollar/Canadian Dollar

Of the top three commodity pairs, the USD/CAD currency pair is the only pair that benefits from rising oil prices. The main reason for this is because Canada remains to be the top exporter of oil to the United States. Investors have observed that every time the price of oil rises in the commodities market, the value of the Canadian Dollar also increases.

US Dollar/Australian Dollar

Since Australia is one of the top three gold exporters in the world, the value of its currency has an 80 percent chance of increasing whenever gold prices increase in the market. If you are a new Forex trader, follow the prevailing price of gold because it has a high correlation to Australia’s currency.

US Dollar/New Zealand Dollar

Another currency pair that is greatly affected by the price of gold is the USD/NZD. Since the economy of New Zealand and Australia are closely related, every time the value of the Australian Dollar picks up, the value of New Zealand Dollar also follows. According to industry experts, the positive correlation between New Zealand Dollar and gold is around 88 percent.