Commodities trade as correlations to either DXY or EUR/USD due to permanent and opposite -90% correlations from averages 1 to 10 years. 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.
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.
WTI trades fairly neutral as not overbought 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.
Brian Twomey
BRIAN TWOMEY ON TRADING 