When a domestic economy is greatly affected by commodity price shifts, then the currency is especially vulnerable. Even for nations whose currency is strongly correlated with commodity pricing, different commodities will affect the currency differently (or perhaps not at all). By knowing which commodities are strongly correlated to which countries, an FX trader can better predict how commodity price shifts will affect currency exchange rates. Oil and gold are two commodities whose pricing is strongly correlated with the currency rates of Australia, New Zealand, Canada - and to a lesser extent, Japan for example.

Source: www.investorguide.com

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