Foreign currency traders, both the active ones and beginners, strongly focus on their trading strategies on technical indicators – moving averages and trend lines, when trading euro or sterling. They rarely glance at other markets for additional hints of the market direction. But these markets can sometimes hold the key to winning position or losing trading on the currency market.
For years, professional money managers have been engaged in secondary markets for confirmation of the position. Using sophisticated charting programs, these experts are able to see the connection between certain markets – revealing movements between investments in one or other direction. Some of these correlations are well-known in the market – crude oil and the Canadian dollar or gold futures and Australian dollar. Others are not so common – for example the exchange rate of the dollar / yen and the short amount of Japanese government bonds (biennial in particular).
In the following articles on this theme we are going to peer at some other markets that may offer real insights of the potential movement of the foreign exchange market.
To be continued…