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Gold-Risk Currency Correlations Weaken As US Data in Focus

Gold-Risk Currency Correlations Weaken As US Data in Focus

David Liu, Technical Strategist

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

-0.46

0.52

0.33

0.35

-0.03

0.62

-0.28

1 Week 60 Min

-0.78

0.73

0.64

0.47

0.25

0.67

-0.36

2 Week 60 Min

-0.61

-0.36

0.15

0.81

0.17

-0.93

-0.67

1 Month Daily

-0.40

0.74

0.66

0.18

-0.01

-0.68

-0.21

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

Weekly Commentary: Although still strong, gold’s correlation with higher yielding assets such as the Australian and New Zealand dollars weakened over the past week. While gold and dollar-based crosses continue to be driven by yields on US debt, Chairman Bernanke’s comments during the week derailed the tight correlations, mentioning that rates will be kept low due to the still-high unemployment rate. The prospect of lower US rates, which helps gold’s anti-dollar status, conflicted with the FOMC Chairman’s warnings that the labor market may not be tracking the overall recovery as quickly.

US data is once again expected to drive gold and FX markets this week. US ISM manufacturing data, monitoring the health of the manufacturing sector, is expected higher, while change in non-farm payrolls is expected to suggest moderate cooling of the labor markets. Rate decisions from the ECB and Bank of England are also expected to have significant effects on the respective currencies.

Gold-Forex_Correlations_04022012_Correlations_With_Risk_Currencies_Still_Elevated_body_Picture_1.png, Gold-Risk Currency Correlations Weaken As US Data in FocusGold-Forex_Correlations_04022012_Correlations_With_Risk_Currencies_Still_Elevated_body_Picture_2.png, Gold-Risk Currency Correlations Weaken As US Data in Focus

-- Written by David Liu, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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