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Gold-FOREX Correlations Shift Back to Anti-Dollar as Traders Await FOMC, Data

Gold-FOREX Correlations Shift Back to Anti-Dollar as Traders Await FOMC, Data

2012-03-12 02:36:00
David Liu, Technical Strategist
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The following table includes the correlation between gold and the most popular currency pairs over various timeframes. A value close to +1 indicates a strong positive relationship between gold and the pair, while a value close to -1 indicates a strong negative relationship. Colored values indicate week-to-week changes of over 30%.

---------------------------------------------------------------------------------------------------------------------------------

Gold

USD/CAD

AUD/USD

NZD/USD

EUR/USD

GBP/USD

USD/JPY

USD/CHF

3 Day 15 Min

-0.81

0.07

0.34

0.07

-0.16

0.82

-0.04

1 Week 60 Min

-0.78

0.47

0.50

0.34

0.25

0.77

-0.31

2 Week 60 Min

-0.60

0.30

-0.40

0.56

-0.48

0.03

-0.60

1 Month Daily

0.27

0.42

0.68

0.65

0.10

-0.19

-0.62

Gold-Forex Correlations for the previous week can be found here.

Weekly Commentary: Longer term correlations still remain mixed, though during the last week of major fundamental events, gold prices improved its correlation with risk currencies, especially the Oceanic dollars. Although shorter term correlations saw gold and the dollar move in tandem due to safe haven moves, much of this was due to ISDA’s classification of the recent Greek debt swaps as a credit-trigger event. Sentiment in the gold market may quiet down for the rest of the week as focus shifts from Europe back to the United States.

On the calendar, major US data releases may drive gold’s price action, especially as gold’s anti-dollar correlation becomes more prominent. As US economic data improves, traders are expecting the Federal Reserve to reduce dovish sentiments and may give commentary of a rate hike before its previously stated 2014 promise. With additional retail sales, CPI and Michigan confidence data, the performance of the dollar may be the main driver behind gold for the coming week.

Gold-Forex_Correlations_03122012_Gold-shifts-anti-dollar_body_Picture_2.png, Gold-FOREX Correlations Shift Back to Anti-Dollar as Traders Await FOMC, DataGold-Forex_Correlations_03122012_Gold-shifts-anti-dollar_body_Picture_3.png, Gold-FOREX Correlations Shift Back to Anti-Dollar as Traders Await FOMC, DataGold-Forex_Correlations_03122012_Gold-shifts-anti-dollar_body_Picture_4.png, Gold-FOREX Correlations Shift Back to Anti-Dollar as Traders Await FOMC, DataGold-Forex_Correlations_03122012_Gold-shifts-anti-dollar_body_Picture_5.png, Gold-FOREX Correlations Shift Back to Anti-Dollar as Traders Await FOMC, Data

-- Written by David Liu, DailyFX Research

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