Commodity Pairs: Our Guide to Currency Correlations
Commodity pairs are currencies linked to the price of commodities. We explore the role they play in building a forex trading strategy.

In the world of forex trading, certain currency pairs are closely linked to the prices of commodities. These are known as commodity pairs. An understanding of these pairs and their correlations is often used by forex traders as part of their trading strategies. In this guide, we’ll explain what commodity pairs are, why they matter, and the role they play in financial trading.
What are commodity pairs?
Commodity pairs are currency pairs that have a strong correlation with the price movements of certain commodities. The currencies involved typically belong to countries that are major exporters of these resources. For instance, the Canadian dollar (CAD), Australian dollar (AUD), and New Zealand dollar (NZD) are known as commodity currencies due to their nations' reliance on the export of oil, gold, and agricultural products, respectively.
Examples of commodity pairs include:
- AUD/USD (Australian dollar/US dollar)
- USD/CAD (US dollar/Canadian dollar)
- NZD/USD (New Zealand dollar/US dollar)

Fund your trading account online with Skrill
How are commodity pairs linked to commodities?
Commodity pairs are influenced by the price fluctuations of specific commodities. For example, the Canadian dollar is strongly linked to crude oil prices, as Canada is a major oil exporter. When oil prices rise, the value of the Canadian dollar often strengthens. Conversely, if oil prices fall, the Canadian dollar may weaken.
Similarly, Australia is one of the world’s largest gold producers, so the Australian dollar tends to follow gold prices. If gold prices increase, the AUD may rise in value, while a drop in gold prices could weaken the AUD.
New Zealand, known for its agricultural exports like dairy and wool, sees its currency linked to the prices of these products. As global demand for these commodities fluctuates, the NZD will often reflect these changes.

Why do commodity pairs matter in trading?
Understanding the correlation between commodities and currencies can be useful for forex traders. By monitoring the prices of key commodities, traders have the potential to make predictions about potential movements in commodity pairs and make informed trading decisions.
For example, if oil prices are expected to rise due to geopolitical tensions, a trader might anticipate a strengthening of the Canadian dollar and decide to go long on the USD/CAD pair. Similarly, if there is a forecast for rising gold prices, traders might choose to take a position in AUD/USD, expecting the Australian dollar to gain value.
Using commodity pairs in your trading strategy
Staying abreast of global commodity trends is vital to trading commodity pairs. Watching commodity prices and understanding the factors influencing these markets, such as supply and demand dynamics, geopolitical events, and economic reports, can help traders anticipate currency movements.
Technical analysis can also be beneficial, as price patterns in commodities often align with movements in commodity pairs. By combining fundamental analysis of commodity prices with technical analysis of currency charts, traders can add new techniques to their approach.
Commodity pairs: Understanding relationships between two factors
Commodity pairs offer a unique opportunity for traders to leverage the relationship between commodities and currencies. By understanding how these pairs are linked to specific commodity prices, traders can use this knowledge to make decisions in the forex market. Staying informed about global commodity trends and using both fundamental and technical analysis can help you effectively trade commodity pairs.
The information provided on this blog is for general informational purposes only and is not intended to constitute professional financial advice. This article contains information about forex and trading; however this article and content does not constitute "advice", nor does it constitute any "recommendation" on whether or how to engage in forex and trading. The information contained in this article should not be relied on for any financial or other transaction.
Further, neither Skrill Ltd. nor any of its Affiliates, endorses or makes any warranties regarding the accuracy or reliability of any opinion, information, or statement provided throughout this article. All forex and trading content contained on or made available in this article is for educational informational, and/or advertising purposes only. Neither Skrill nor any of its Affiliates are licensed financial advisors and do not hold any licenses to provide trading or investment advice.
Skrill Ltd. does not endorse or promote any form of forex and trading. Please note that all forms of forex and trading (online and otherwise) carry with them inherent financial risk and risk of financial loss. Any forex and trading activities should be exercised with responsibility and moderation in compliance with all applicable laws and regulations.