6N Correlations: Equities, Bonds, Commodities, and Carry Trades
6N doesn’t move in a vacuum. NZD futures have tight correlations with global equities, bond yields, commodity markets, and the entire carry-trade complex. If you ignore these relationships, you’ll constantly be confused by moves that have nothing to do with New Zealand itself. Understanding these correlations keeps you aligned with the real drivers.
Equities: The Risk-On Correlation
6N correlates positively with global stock markets. When equities rally, risk appetite improves, and NZD strengthens.
- S&P 500 up → 6N usually up
- S&P 500 down → 6N usually down
The correlation isn’t perfect, but it’s strong enough that equity momentum often dictates NZD tone for the day.
Why equities matter
- NZD is a high-beta currency
- Risk-on flows support NZD buying
- Portfolio managers rebalance into yield during calm markets
If indices are ripping, betting against 6N is usually a bad idea.
Bonds: The Rate Differential Driver
6N tracks interest rate spreads between the U.S. and New Zealand. Bond markets determine those spreads.
- Rising U.S. yields → USD strength → 6N down
- Falling U.S. yields → USD weakness → 6N up
- Rising NZ yields → NZD strength → 6N up
Watching 10-year yields on both sides gives you a real-time read on currency flow.
The key bond markets to track
- U.S. 10-year
- New Zealand government bonds
- Australian 10-year (proxy for regional flows)
If you’re trading 6N without glancing at bond yields, you’re missing half the story.
Commodities: Indirect but Important
New Zealand is heavily agricultural, not industrial. Unlike AUD, NZD isn’t directly tied to metals. But global commodity demand still matters.
Why?
- Commodity demand = stronger global growth
- Stronger global growth = risk-on sentiment
- Risk-on sentiment = NZD strength
So commodities influence NZD indirectly through risk appetite.
Commodities that correlate most with NZD
| Commodity | Correlation Strength | Why |
|---|---|---|
| Dairy Index | Very strong | New Zealand’s primary export |
| Gold | Moderate inverse | Risk sentiment relationship |
| Iron Ore | Weak-to-moderate | Impacts Australia more |
Dairy matters the most — but overall growth expectations matter even more.
Carry Trades: The Hidden NZD Engine
NZD is historically a carry-trade currency. Investors borrow in low-yield currencies (JPY, EUR) and invest in NZD to earn the yield spread.
When carry trades unwind, NZD collapses fast. When carry trades expand, NZD rallies hard.
Carry-trade conditions
- Low volatility + high NZ rates → carry inflows → 6N up
- High volatility + falling NZ rates → carry unwinds → 6N down
This is why NZD gets smoked during global panic — everyone unwinds the same trade at the same time.
Putting the Correlations Together
| Market Condition | 6N Reaction |
|---|---|
| Equities up | 6N bullish |
| Equities down | 6N bearish |
| U.S. yields rising | 6N bearish |
| U.S. yields falling | 6N bullish |
| Low volatility | Carry inflows → bullish |
| High volatility | Carry unwind → bearish |
These correlations explain most of 6N’s macro behavior before you even touch a chart.
Final Take
6N follows equities, tracks bond spreads, reacts to global commodity demand, and is heavily influenced by carry-trade flows. You’re not trading New Zealand — you’re trading global risk and yield cycles. To connect this with bigger macro drivers, read the risk sentiment guide and the USD dominance article.