Are you interested in commodity trading? If it is so, you need to prepare yourself by knowing various information and terms related to this trading. The examples are about the strategy, market condition, loss, currency pairs used, and many more again.
You also need to be familiar with the commodity dollar to understand the correlation between currencies and commodities. The commodity dollar (comdoll) is the currency of a country whose price movements are closely related to the price of the country's exported commodities.
The commodity dollar is also often referred to as a commodity currency. For your information, not all currencies of commodity-producing countries can be called commodity dollars. There are some dollars that are known as the major commodity in a forex market.
So far there are only three major commodity dollars in forex. Those are like the Australian dollar (AUD), the Canadian dollar (CAD), and the New Zealand dollar (NZD). They have different characteristics as well. Here is the complete information of it.
The Australian dollar (AUD)
Australia's largest export commodity is from the coal briquettes aspects. It accounts for 23.1% of the total product exported by Australia this year. The second-largest export was iron ore (19.4%), followed by petroleum gas (7.12%), and for sure the gold (6.5%).
Globally, Australia is the world's largest exporter of iron ore. Australia is also the second-largest gold producing country in the world. That is why; it is reasonable that the AUD price movement and the gold price (XAU) influence each other.
Please ensure one thing if you plan to trade AUD/USD (Australian dollar/US dollar. You can take into account the XAU/USD (gold/US dollar) price movement as one of your technical analysis references. The fundamental analysis is also needed to support your trading activity.
To do so, follow the economic and geopolitical news of Australia's main export destination countries. The example is China, which receives 35.5% of Australia's total commodity exports. Make sure that you always follow the latest news about this and also other important updates.
The Canadian Dollar (CAD)
The second commodity dollar in this recent forex trading is the Canadian dollar. One of Canada's leading commodities is crude oil, which reaches 15.5% of Canada's total exports. When world oil demand decreases, oil prices will also fall and usually have an impact on CAD prices.
Because the price movements of USDCAD (US dollar / Canadian dollar) and CLS10 (crude oil) influence each other, the trend of both is very important for you to pay attention to. It is especially when making a trading strategy for one of these pairs.
Don’t forget to pay attention to fundamental news from Canada's main export destination countries. The examples are from the United States (72.8% of total exports) and China (5%) before opening USD/CAD positions in the market. Get the news from various trusted sources.
The New Zealand Dollar (NZD)
New Zealand's main export commodity, which also affects NZD price movements, is livestock products. The examples are their famous dairy products and high-quality meat. Its largest markets are China (24.3% of total exports), Australia (15.4%), and the United States (9.54%).
That is why; it is recommended to follow developments and fundamental updates from these countries. It is because it will also affect the NZD/USD price trend (New Zealand dollar/US dollar) in the market. Use it as your additional strategy to get the profit.
In general, if commodity prices in a market strengthen, the dollar value of the commodity concerned will also strengthen. The different conditions can also happen. It means that if the commodity prices weakened, the dollar value of the commodity will also be weakened.
Now, by understanding this correlation, you can create a more mature trading strategy to seize profit opportunities. Find news and market updates on commodity dollars are essential. The news about many currency pairs must be followed too to support your forex trading activity.
