If you have been trading $USDMXN without watching crude, or $USDZAR without monitoring gold, you have been flying partly blind. Exotic pairs

If you have been trading $USDMXN without watching crude, or $USDZAR without monitoring gold, you have been flying partly blind. Exotic pairs have structural relationships to commodities, risk sentiment, and interest rate differentials that are strong enough to explain the majority of their directional moves. Understanding which relationships are real - and which are drawing correlation lines over unrelated noise - is the difference between anticipating a move and getting caught by it. The Oil-MXN Connection Mexico is a major crude exporter. When $USDMXN declines and WTI crude strengthens simultaneously, the signal is not coincidental: peso strength is being reinforced...