Trader and author Raghee Horner of IBFX mentions her love for Com Dolls:
As she says, “With my nearly twenty year background in commodity futures it’s not surprising to me that I often gravitate to “commodity currencies” like the USD/CAD and AUD/USD. I love the synergy these two pairs have with crude oil and the commodities index, respectively.”
I personally take a slightly different approach to Raghee on this. She’s as ardent fan of trading the USD/CAD in relation to crude oil, but the problem that I've found with USD/CAD is that the USD is VERY fickle. You have to remember that MAJORITY of the world's trades involve the USD, hence you're gonna get lots of fluctuations on a variety of news reports. Just take a look at the Forex
Forex
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Read this Term Factory Calendar on any given day, and you'll see what I mean. Scary stuff.
Hence, I prefer trading the CAD/JPY as a substitute for the USD/CAD, and the reason why I think CAD/JPY is a good pair to trade in terms of oil, is because Canada is an exporter of oil, and Japan is an importer of oil, so obviously this is reflected in CAD/JPY, and you avoid all the "heartattacks" that the USD brings.
My point is, the USD/CAD can react to virtually anything, even to news reports that don't really appear to be that big of a deal. I have noticed this more and more, and it's becoming kind of annoying. Nowadays, when we trade the dollar, we have to be concerned about "relatively" small news which can give some nasty surprises.
Anyway, Raghee continues:
“The price action in crude oil as prices are finding support above the key 80.00 level is pushing the Canadian Dollar higher against the U.S. Dollar. The value of the Canadian Dollar and strength of the Canadian economy has a strong correlation to the price of crude oil. Consider that a strong crude oil market is also usually a reflection of a weaker U.S. Dollar. So the impact on the USD/CAD is double: The weaker U.S. Dollar strengthens crude oil prices while allowing the USD/CAD to trade lower.”
You can read all of her insightful post over at:
https://www.ibfx.com/Corporate/post/2010/03/18/Comm-Dolls-on-the-Move.aspx
Trader and author Raghee Horner of IBFX mentions her love for Com Dolls:
As she says, “With my nearly twenty year background in commodity futures it’s not surprising to me that I often gravitate to “commodity currencies” like the USD/CAD and AUD/USD. I love the synergy these two pairs have with crude oil and the commodities index, respectively.”
I personally take a slightly different approach to Raghee on this. She’s as ardent fan of trading the USD/CAD in relation to crude oil, but the problem that I've found with USD/CAD is that the USD is VERY fickle. You have to remember that MAJORITY of the world's trades involve the USD, hence you're gonna get lots of fluctuations on a variety of news reports. Just take a look at the Forex
Forex
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest trading market by volume. According to the Bank of International Settlements (BIS) latest survey, the Forex market now turns over in excess of $5 trillion every day, with the most exchanges occurring between the US Dollar and the Euro (EUR/USD), followed by the US Dollar and the Japanese Yen (USD/JPY), then the US Dollar and Pound Sterling (GBP/USD). Ultimately, it is the very exchanging between currencies which causes a country’s currency to fluctuate in value in relation to another currency – this is known as the exchange rate. With regards to freely floating currencies, this is determined by supply and demand, such as imports and exports, and currency traders, such as banks and hedge funds. Emphasis on Retail Trading for ForexTrading the forex market for the purpose of financial gain was once the exclusive realm of financial institutions.But thanks to the invention of the internet and advances in financial technology from the 1990’s, almost anyone can now start trading this huge market. All one needs is a computer, an internet connection, and an account with a forex broker. Of course, before one starts to trade currencies, a certain level of knowledge and practice is essential. Once can gain some practice using demonstration accounts, i.e. place trades using demo money, before moving on to some real trading after attaining confidence. The main two fields of trading are known as technical analysis and fundamental analysis. Technical analysis refers to using mathematical tools and certain patterns to help decide whether to buy or sell a currency pair, and fundamental analysis refers to gauging the national and international events which may potentially affect a country’s currency value.
Read this Term Factory Calendar on any given day, and you'll see what I mean. Scary stuff.
Hence, I prefer trading the CAD/JPY as a substitute for the USD/CAD, and the reason why I think CAD/JPY is a good pair to trade in terms of oil, is because Canada is an exporter of oil, and Japan is an importer of oil, so obviously this is reflected in CAD/JPY, and you avoid all the "heartattacks" that the USD brings.
My point is, the USD/CAD can react to virtually anything, even to news reports that don't really appear to be that big of a deal. I have noticed this more and more, and it's becoming kind of annoying. Nowadays, when we trade the dollar, we have to be concerned about "relatively" small news which can give some nasty surprises.
Anyway, Raghee continues:
“The price action in crude oil as prices are finding support above the key 80.00 level is pushing the Canadian Dollar higher against the U.S. Dollar. The value of the Canadian Dollar and strength of the Canadian economy has a strong correlation to the price of crude oil. Consider that a strong crude oil market is also usually a reflection of a weaker U.S. Dollar. So the impact on the USD/CAD is double: The weaker U.S. Dollar strengthens crude oil prices while allowing the USD/CAD to trade lower.”
You can read all of her insightful post over at:
https://www.ibfx.com/Corporate/post/2010/03/18/Comm-Dolls-on-the-Move.aspx
