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Intermarket Analysis Cheat Sheet

 

That’s a lot of intermarket 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!

IfThenWhy

Gold

USD

During times of economic unrest, investors tend to dump the dollar in favor of gold. Unlike other assets, gold maintains its intrinsic value.

Gold

AUD/USD

Australia is the third biggest gold producer in the world, sailing out about $5 billion worth a year.

Gold

NZD/USD

New Zealand (rank 25) is also a large producer of gold.

Gold

USD/CHF

Over 25% of Switzerland’s reserves are backed by gold. As gold prices go up, the pair moves down (CHF is bought).

Gold

USD/CAD

Canada is the 5th largest producer of gold in the world. As gold price goes up, the pair tends to move down (CAD is bought).

Oil

USD/CAD

Canada 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 go up, the pair moves down.

Gold

EUR/USD

Since both gold and euro are considered “anti-dollars,” if the price of gold goes up, EUR/USD may go up as well.

Bond yields

Local Currency

An economy that offers 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.

Dow

Nikkei

The performance of the U.S. economy is closely tied with Japan.

Nikkei

USD/JPY

Investors consider the yen as a safe-haven and tend to seek it during periods of economic distress.