Commodities has typically been a market that rails against forex. Whilst both markets drive growth and capital in the countries they’re hosted, they have pull and push effects against each other and the other major markets, with China’s new silk road boosting commodities against forex through its policy of unilateral investment.
However, new developments in the international markets and particularly cryptocurrency are helping to reshape the interaction of the markets. Unlike many times before, we’re seeing circumstances boost and help the two markets to almost work together.
Interaction of Cryptocurrency
Bitcoin and its relatives have exploded into international attention this year following the stunning rise of the digital currency through the USD$15,000 barrier. Following this has been a mass scramble in many nations, particularly China, to try and regulate or flat-out ban the disruptive currency. But what does this mean for commodities? Innovative uses of commodities is on the up around the world. TMS Titanium (www.tmstitanium.com) have detailed this in the past, noting some of the expanding uses of titanium in 3D printing and medical applications.
In countries where currency control can be hard to overcome, like China, the rise in cryptocurrency and related forex exchange is giving an avenue to purchase these technologies. The forex market is seeing gains just as the commodities are.
Global Warming
Global warming has been credited with causing some of the disastrous storms seen hitting the South Coast over the summer. Unforeseen weather circumstances and an inability to prepare for them has led to many consequences, not least the movement of ethylene to a rare commodity.
In a wider sense, global warming is having a positive effect for forex and commodities markets, like cryptocurrency. On one hand, we have commodities becoming rarefied or more important for tackling the effects of global climate change and for developing green technologies. At the same time, we have forex markets boosted by the increased valuation of currencies in countries pursuing green bonds and widespread green tech; crucially, Australia and China, although the USA has lagged.
Forex, commodities and other markets have always been at odds, with positive effects on one side often dragging down the other or providing an excessive boost. However, circumstances faced the world over and increases in technological innovation mean that it might just be a shift in the market going forward.