Commodity
Raw stuff markets price: energy, metals and crops that move currencies with them.
A commodity is a tradeable raw material like oil, gold or wheat. Commodity prices drive exporter currencies and lead inflation, which is why forex traders watch them.
A commodity is a basic physical good traded in bulk: crude oil, gold, wheat, copper. Commodities link directly to forex through exporter currencies, the loonie with oil, the aussie with iron ore, and through inflation, which starts in commodity prices before reaching consumers.
How It Works
- Priced globally in dollars on futures exchanges
- Exporter currencies track their commodities
- Rallies feed consumer inflation with a lag
Trading Tips
Pair commodity views with their currencies for confirmation
Trade commodity trends, not single headlines
Watch inventories weekly for oil and gold flows
Commodity Example
Say crude rallies from $70 to $90 while gold holds firm. USD/CAD slides 300 pips on oil income, inflation expectations climb, and rate-hike bets reprice. One commodity move, three forex consequences.
How Traders Use Commodity
Keep oil and gold charts beside every commodity-currency position. Commodities confirm or deny your forex thesis daily. When they diverge from your pair, trust the commodity first.
Related Terms
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