Currency market: WTI, Cocoa and EUR/USD, US Dollar Index triangulation trades
|Commodities trade as correlations to either DXY or EUR/USD due to permanent and opposite -90% correlations from averages dating to 1999 and beyond.
XAU/USD correlates to EUR/USD at +23%, +81%, +8%, +2%, +2%.
DXY negatively correlates to XAU/USD at -15%, -66%. EUR/USD wins at correlations because EUR/USD and XAU/USD are the same exact currencies and classified as risk assets.
The speculation for Commodities is EUR/USD beats DXY to correlations across all Metals including Copper. DXY beats EUR/USD Correlations in Grains, Softs and Energy. While EUR/USD owns Metals by correlations, DXY owns Agricultural Foods, Drinks and Oil.
The natural transition is add Commodities to triangulate currency trades. Long EUR/USD and XAU/USD is matched by short DXY or any USD currency as USD/Other Currency.
WTI
WTI trades 72.08 and 78.13 Vs 81.68 and 83.78. Above 83.78 targets 95.20. Below 72.08 targets the range from 72.08 to 68.18 at the 5 year average.
Inflation Vs WTI Correlations runs: +2%, +68%, +62%, +84% and +82%. Inflation Vs WTI last month ran as: -3%, +72%, +67%, +85%, +85%.
Inflation Averages short term run as : 3.5, 3.95, 4.22, 4.49, 5.48, 5.73, 4.59, 4.06. The overall big line is located at 6.00's.
DXY Vs WTI Correlations factor as +48%, +6%, +34% and +53%. EUR/USD Correlates negatively to WTI.
WTI trades fairly neutral as not overbough nor oversold.
Cocoa
Cocoa Vs EUR/USD runs negative Correlations across the board to averages 1 to 10 years. DXY Vs Cocoa runs positive as: +16%, -18%, +22%, +29%, +30%, +32%, +36%, +32%,.
Inflation Vs Cocoa Correlations run: -25%, -59%, -56%, -17%, -4%.
Cocoa trades massive overbought and targets 6308.03, 5121.35 and caution at 4574.73. The 5 year average is located at 2884.20 and 10 year at 2749.70.
Only trade strategy available is shorts due to severe overbought.
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