|By PR Newswire||
|September 13, 2013 11:19 AM EDT||
NEW YORK, Sept. 13, 2013 /PRNewswire-iReach/ -- HEFFX.Com Commodity currencies, are currencies of countries that heavily depend on commodity exports.
Typically, a commodity currency's price will move in the same direction as the price of its country's main commodity export. The price of a commodity currency is also affected by its country's trade balances, with respect to the country's main commodity export.
The most popularly traded commodity currencies are from Canada, Australia and New Zealand.
The currencies from these countries are also known as the "Comdolls", since they are all named "Dollar". Although many other countries export commodities, these three countries depend more on their commodity exports, since their exports make up a greater proportion of their GDP. This means that a fluctuation in the price of a main commodity that one of these countries exports, will have a large effect on the that country's economy and currency.
Canada's main export is Crude Oil.
This means that changes in the price of Crude Oil will have a impact on the country: both its economy and currency. A country will import more Crude Oil than it exports, this is not the case with Canada. Another main Canadian export is Aluminum. It could also be said that Canada relies on its smaller exports, including Zinc, Copper and Nickel. Canadian Dollar (CAD)
Australia's main export is Gold.
This means that changes in the price of Gold will have a impact on the country: both its economy and currency. And a decline in Gold production would also likely affect the price of the Australian dollar (AUD) and potentially weaken it. Although Australia does not export as much Crude Oil as Canada, nevertheless, Crude Oil is also a significant export of Australia.
New Zealand doesn't particularly have one main export, but rather multiple main exports.
New Zealand depends mostly on its exports of Timber, Dairy, and Meat products. A number of commodity indices have proven to be worthy indicators of the New Zealand Dollar's (NZD) long-term value.
In Summary: commodity currencies work simply. The main commodity currencies are the Canadian Dollar, the Australian Dollar and the New Zealand Dollar, all of which are also known as the Comdolls.
Typically, the price of a country's currency will move in the same direction as the price of the country's main export. However, this price relationship is generally long-term.
You should remember that short-term fluctuations in the price of a country's main export, will rarely affect the price of that country's currency to any significant degree.
Traders and investors should attempt to spot long-term trends in the prices of main exports of different countries, in order to take advantage of them, since there is usually a positive correlation between the price of a country's main export and the price of that country's currency.
If there is a long-term downward price trend for a country's main export, that country's currency is likely to also decrease in price in the long-run.
If done correctly, trading Commodity Currencies can be very effective and a great opportunity for traders and investors in the Forex market, to make long-term profits.
Read More from Paul Ebeling at www.livetradingnews.com
Media Contact: Shayne Heffernan, Knightsbridge Law Co Ltd, +65 6329 6408, firstname.lastname@example.org
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