Trading Different Asset Classes In The Futures Market –Commodity And Currency Futures
Commodity and currency are two of the commonly traded asset classes in the futures market. Learn more about it on how you can trade the asset class using the futures contract.
Commodity futures are a popular asset class in the futures market. The traders can hedge and speculate in the futures market for the raw materials. The commodity market lets traders trade on many asset classes. This includes gold, silver, oil, copper as well as agricultural commodities.
The commodities are of standardized sizes and are found in the raw state. The investor basis his strategy on the commodity futures market based on the macroeconomic scenario of the market. The commodity futures market is highly liquid and is also preferred by many because the market is so huge that a single product cannot impact its prices and drive the commodity market.
The oil inventory released by the US Energy Information Administration is something that is closely watched by the traders in the commodity futures market. This lets the investors have an idea about the supply and demand for oil. The trader who trades on gold and silver study the risk sentiment and the volatility in the market to determine when to buy and when to sell the precious metal. The trend of the US dollar is also something that is watched closely because it impacts the commodity markets. The commodity market and the currency market are inversely related. When the dollar goes up in value the commodity prices drop and vice versa.
Traders can also trade in the currency futures market. The biggest asset market is the currency market which is influenced by the macroeconomic factors and the policy of the central bank. The commonly traded currencies are influenced by the strength and the weakness of the economy. The GDP numbers, unemployment data, and the inflation rates are closely watched by traders who trade in the currency market.
The investors who trade in the currency futures contract pay a lot of attention to the statement that the central bank releases and an announcement that the bank makes to lower or raise the rate of interest. When the interest rate is high then this is good news for the currency traders. If the inflation rate is lower than the valuations get dropped. This information is watched very closely by the traders who want to take a buy or a sell position in the currency market.