Sunday, August 21, 2011

Intermarket Analysis Sheet

That's a lot of inter-market correlations to remember so let's do a quick recap. The price action of currencies is often driven by their relationship with commodities, bonds, and stock indices.
Here's a neat one-page cheat sheet for you to bookmark and make it easy for you!

GoldUSDDuring times of economic unrest, investors tend to dump the dollar in favor of gold. Unlike other assets, gold maintains its intrinsic value.
GoldAUD/USDAustralia is the third biggest gold producer in the world, sailing out about $5 billion worth a year.
GoldNZD/USDNew Zealand (rank 25) is also a large producer of gold.
GoldUSD/CHF25% of Switzerland's reserves are backed by gold. As gold prices goes up, the pair moves down (CHF is bought).
GoldUSD/CADCanada is the 5th largest producer of gold in the world. As gold price goes up, the pair tends to move down (CAD is bought).
OilUSD/CADCanada 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 goes up, the pair moves down.
GoldEUR/USDSince both gold and euro are considered "anti-dollars," if the price of gold goes up, EUR/USD may go up as well.
Bond yieldsLocal CurrencyAn economy that offer higher returns on its bonds attract more investments. This makes its local currency more attractive than that of another economy offering lower returns on its bonds.
DowNikkeiThe performance of the U.S. economy is closely tied with Japan.
NikkeiUSD/JPYInvestors consider the yen as a safe-haven and tend to seek it during periods of economic distress.
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