How to Trade Futures/Forex Correlation

01/13/2012 6:00 am EST

Focus: FOREX

Raghee Horner

Futures & Forex Analyst, SimplerTrading

Intermarket relationships are critical in forex, and this video explains in great detail how the US dollar, Dow, and crude oil are all connected using recent action in major USD-based pairs to illustrate the key points.

I recently held my weekly Monday morning webinar and the topic was the forex market pulse. I dove a little deeper into what I look for between the dollar/Dow/crude and the affect on commodity futures.

The video runs 18 minutes and explains what I look for in “normal” forex market pulse correlation relationships as well as the way the USD/CAD and AUD/USD are behaving because of the way the US dollar index, Dow Jones Industrial Average, and crude oil are trending.

A couple takeaways: the dollar, Dow, and crude oil markets are all trending higher on their daily charts with the dollar being the strongest. The question for traders then is which is dictating price action, and therefore, whether risk appetite really is the reason for the crude oil rally, or whether it is the concerns in Iran (which gets my vote).

The usual push/pull of the dollar and Dow is not in play, and this makes gauging risk a little more complicated, especially when you consider that crude oil is moving higher while the continuous commodity index has been trending lower.

Here’s the video:

By Raghee Horner of

Raghee is also a frequent speaker at The Traders Expo.

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