This morning, for our Currency Currents Members, we delved upon the divergence between gold and the U.S. dollar. Ultimately, we feel this relationship could prove crucial to the direction the currency market takes now and a short ways down the road.

While correlations are fairly easy to spot, they never seem to be as easy to predict. It certainly isn’t child’s play, but it still seems a lot like follow 'the' leader meets musical chairs. You have assets moving together (or apart) as expected until the music stops and everything goes it’s own way.

It’s when the music starts back up that we try to determine if things will pick up from where they left off – who’s following and who’s leading?

Gold and the Australian dollar had a tight positive correlation up until last month. Based on Australia’s economy and it’s exposure to gold prices, it’s easy to understand why the Australian dollar might be influenced by the yellow metal. But it’s not as easy to understand why it wouldn’t be ...

Gold is moving lower as the Australian dollar moves higher on the verge of a major technical breakout.

What’s missing here? Is gold just a bit tired from its run to over $1000? Or is it telling us that the Australian dollar is somewhere it doesn’t belong?

Jack Crooks

Black Swan Capital LLC

http://www.blackswantrading.com/

Black Swan Capital's Currency Snapshot is strictly an informational publication and does not provide individual, customized investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed disclaimer can be found at http://www.blackswantrading.com/disclaimer.html

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