Commodity Correlation with FX/Bonds – How do you manage it?

asked by u/wei.garcia · 13d · 3 answers

Hey everyone, still relatively new to trading commodities, mostly been focused on $CL_F and $GC_F. I'm starting to see more talk about how these move in relation to the dollar index and bond yields, and frankly, I'm a bit lost on how to factor that into my analysis. Are there specific indicators or processes you use to incorporate the broader macro picture, especially the FX and fixed income correlations, into your commodity trade planning?

Join the full discussion

Top answers

  • u/hassan.pillai· 4 pts· 13d

    Correlation often gets overemphasized. A strong correlation doesn't necessarily mean causation or a reliable predictive edge. Focusing on the fundamentals of the commodity itself might be more fruitful than trying to perfectly time every macro ripple.

  • u/freshforexteam1875· 4 pts· 13d

    It's definitely a rabbit hole, but a good one to go down. For me, I mainly keep an eye on the DXY and 10-year yield for the general direction. Do you use any particular charting tools that allow you to overlay those on your commodity charts?

  • u/thao_pratama· 2 pts· 13d

    Correlation isn't causation, and relying too heavily on historical correlation without understanding the underlying drivers will burn you. Focus on the commodity fundamentals first.