Cross-Asset Correlations
Gold-yields, oil-CAD, equities-JPY — when the rules hold and when they break
- Identify the major cross-asset correlations that affect FX
- Recognise when correlations break and what that signals
- Use cross-asset moves to predict the next FX move
Gold ripped to a new high. Yields dropped. CAD followed oil higher. AUDJPY sold off when stocks did. Every FX move is connected to a wider web of asset prices — and reading the web gives you the cleanest macro lens available.
The five durable correlations
(1) Gold-real yields: gold rises as real yields fall (gold pays no coupon, so it's the alternative to TIPS). (2) Oil-CAD: Canada is an oil exporter; CAD tracks WTI. (3) AUDJPY-S&P: AUDJPY rallies in risk-on, drops in risk-off. (4) USD-yields: USD broadly tracks US 2y. (5) Copper-AUD: Australia exports iron + copper; copper price feeds AUD.
Multiple assets confirming the macro story. Gold up, real yields down, USD soft, equities mixed — coherent dovish regime. Trade with confidence.
Gold and yields up together (rare). Oil up, CAD weak (unusual). The break is a signal: a non-obvious driver has taken over. Slow down — figure it out before trading.
Reading the web
Before any trade, check 2-3 related assets. Long EURUSD? Check Bund-Treasury spread, gold (DXY proxy), equity risk regime. If all three confirm the trade, your conviction is higher. If one breaks the pattern, investigate — there's usually a hidden driver.
USD/CAD bullish (USD up vs CAD). But: oil ripping to new highs. What's the warning?
- Cross-asset web is the macro mosaic
- Five durable: gold-real yields, oil-CAD, AUDJPY-S&P, USD-2y, copper-AUD
- Correlations holding = high-confidence regime
- Breaks signal hidden drivers — investigate first
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