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Commodity, stock and currency traders all track similar indicators. These indicators have an impact on each market. Of course one needs to know how these indicators affect the currency markets.

A word of caution things change so always make sure that you test this on your demo account before going live.

• For years the euro has been referred to as the “anti-dollar.” Investors poured their assets into Europe when they didn’t like what’s happening in the U.S. economy. So, look to invest in the euro, if the U.S. economy looks soft was the catch phrase.

• What we have seen lately is that when the US economy really tanked there was a “flight to safety”. Money came from the euro and every other currency back into the USD.This will continue until people wake up to the USD and realise that it is worth less every day, while the printing presses are running at full speed, churning out billions of extra USD. We are already seeing Asian and Middle Eastern countries putting more of their foreign reserves into other currencies reducing the percentage of USD held. Look for this trend to increase.

• · The Japanese yen is the market gauge for risk. So when the Dow goes down, the yen generally goes up. When the Dow goes up, the yen generally goes down. The Swiss frank has also been in the same basket in the past yet it seems to be out of favour lately.

• · Agricultural prices affect the New Zealand dollar (NZD). That means as agriculture prices increase, it helps the NZD.

• · Japan likes to have a “cheap” currency. Since they are major exporters, they want their goods to appear very inexpensive. The BoJ is known to intervene in the market to try and keep the YEN low.

• · Gold is one of Australia’s major exports; therefore the price of gold influences the Australian dollar (AUD). So as gold rises, the AUD rises.

• · The Euro zone and the U.K. have similar economies. So if you see the Euro or British Pound go upward, the other is likely to go up also. This is why in many years EUR/GBP will range trade. Range trading is where there is no definable trend upward or downward. It’s basically sideways.

• · Over a long period of time, the health of the U.S. economy influences the Canadian dollar. So if you’re watching the U.S. markets, you know how the CAD will perform long-term. The U.S. depends on Canada for oil, lumber etc. So when Canada’s major trading partner suffers, so do they. The Canadian dollar (CAD) is highly influenced by oil. That means as oil goes up, it helps the CAD.

• ·      Australia and New Zealand have a tendency to follow one another’s economies. They both tend to have rising and falling interest rates at similar times and they are big exporters. China gets a lot of food products from New Zealand and many of their other products from Australia. This is why, in many years, AUD/NZD will range trade.

• · When the Nikkei is down over night and the U.S. stock futures point to a lower opening, there’s a good chance that EUR/JPY will head lower in the short-term.

You can use this information when deciding what currency to Buy or Sell. Short term moves will always muddy the waters, news that relates to the above points will move markets, but long term the underlying fundamentals will eventually win out.