Leaving no stone unturned – why is AUDUSD down?
Let me share with you something I have been doing for the past 20 years. This is how I connect my trading to what is happening in the real world. If you thought that by mastering trading from now on your life is just you and your computer, then you become like this↓ one day. So continue to learn, renew yourself, keep yourself tapped into the real world, form relations…
Rebar and the Aussie Dollar connection
I just found out that AUDUSD is correlated to rebar futures.
AUD/USD moving pretty much lockstep with rebar futures…SoMP interesting, but rebar + iron ore futs the key link now
— Chris Weston (@ChrisWeston_IG) May 5, 2016
Ok I know futures but not rebar. Next step – check on Internet.
So this is rebar, short for reinforcing bar and is made from steel. It is used to reinforced concrete and is a major material in almost all civil engineering structures. Here is a very interesting product flyer from Singapore’s only steel mill Natsteel.
Is there an Australian connection? Turns out Australian is a minor steel producer. BUT steel comes from iron ore which Australian is a GIANT global supplier.
And then this.
It turns out rebar>steel>iron ore>mining>exports is a big contributor to demand and strength of AUD.
Unfortunately I could not do an overlay of AUDUSD to the rebar futures chart directly on Barcharts.com so I had to substitute with FXA which is an ETF. Apparently Barcharts provides data of exchange traded products only. One look at this chart, the loop back to that Christ Weston tweet is complete.
Why are rebar futures dropping? Continue digging…