Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR/USD

This is a discussion on Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR/USD within the First Steps forums, part of the Reception category; shakones initial comment re flipping your thoughts sums it up well.....or you asked a more retarded question than first thought...... ...

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Old Aug 5, 2013, 1:53am   #9
 
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

shakones initial comment re flipping your thoughts sums it up well.....or you asked a more retarded question than first thought......

"Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR/USD"

back test for.....lets go wild.......a month, & you will answer the above. wake up?
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Old Aug 7, 2013, 3:01am   #10
 
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

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Originally Posted by hybrid View Post
Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR/USD
Hi Hybrid,

To understand these correlations, it's first important to know how to read a currency quote. The first currency listed in a currency pair is the base currency. The second currency is the counter currency (AKA the quote currency).

So for USD/JPY, USD is the base currency, and JPY is the counter currency. For EUR/JPY, EUR is the base currency, JPY is the counter currency.

When you look at the chart for a currency pair and see the price rising, it means the base currency is rising in value relative to the counter currency. It is equally correct to say that the counter currency is falling in value relative to the base currency.

Going back to the example of USD/JPY and EUR/JPY, since JPY is the counter currency for both pairs, you will see both pairs rise in value when JPY falls, and both pairs will fall in value when JPY rises.

If you compare USD/JPY and EUR/USD, the one currency both pairs have in common is USD. However, USD is the base currency of USD/JPY, while it's the counter currency of EUR/USD. The means, if USD is rising in value, you will see USD/JPY rise while EUR/USD falls.

I hope that helps.

Jason

Last edited by Jason Rogers; Aug 7, 2013 at 3:10am.
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Old Aug 7, 2013, 3:23am   #11
 
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

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Originally Posted by Splitlink View Post
I've wondered that, myself. The pair does not seem to be named correctly. Should it not be JPN/USD if the chart says 100?
I used to feel the same when I first read currency quotes, because I kept thinking of the "/" symbol as part of a fraction with the numerator first and the denominator second. However, with currency quotes, it's the reverse. We are saying that 1 unit of base currency is equivalent to so many units of the counter currency. Or with USD/JPY, one unit of USD is equivalent to so many units of JPY.
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Old Aug 8, 2013, 8:27am   #12
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

hybrid started this thread
Quote:
Originally Posted by Jason Rogers View Post
Hi Hybrid,

To understand these correlations, it's first important to know how to read a currency quote. The first currency listed in a currency pair is the base currency. The second currency is the counter currency (AKA the quote currency).

So for USD/JPY, USD is the base currency, and JPY is the counter currency. For EUR/JPY, EUR is the base currency, JPY is the counter currency.

When you look at the chart for a currency pair and see the price rising, it means the base currency is rising in value relative to the counter currency. It is equally correct to say that the counter currency is falling in value relative to the base currency.

Going back to the example of USD/JPY and EUR/JPY, since JPY is the counter currency for both pairs, you will see both pairs rise in value when JPY falls, and both pairs will fall in value when JPY rises.

If you compare USD/JPY and EUR/USD, the one currency both pairs have in common is USD. However, USD is the base currency of USD/JPY, while it's the counter currency of EUR/USD. The means, if USD is rising in value, you will see USD/JPY rise while EUR/USD falls.

I hope that helps.

Jason
well written, and clears up what i now see as something very simple.

still, no such thing as a silly question :-)
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Old Aug 8, 2013, 6:50pm   #13
 
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

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still, no such thing as a silly question :-)
Quite right! How else would we learn?
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Old Aug 8, 2013, 10:30pm   #14
 
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

interest rate parity- anyone

international exchange rates and targets- krugman

happy reading
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Old Aug 8, 2013, 11:12pm   #15
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

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Originally Posted by Splitlink View Post
I've wondered that, myself. The pair does not seem to be named correctly. Should it not be JPN/USD if the chart says 100?
Splitlink is this sarcasm or have you been into the snuff again....? USD is the control if quoted first and therefore it is named correctly (i.e. 100 JPY to make a single USD). Just as the Euro is the static control in EUR/USD and you need 1.33 USD to make a single EUR.
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Old Aug 9, 2013, 8:39am   #16
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Re: Why does the USD/JPY link to the EUR/JPY, but the USD/JPY is negative to the EUR

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Originally Posted by random12345 View Post
Splitlink is this sarcasm or have you been into the snuff again....? USD is the control if quoted first and therefore it is named correctly (i.e. 100 JPY to make a single USD). Just as the Euro is the static control in EUR/USD and you need 1.33 USD to make a single EUR.
Take a look at the charts and tell me again. The scale is Yen to the dollar, but the title does not conform to the rule, does it? If it does, what about the Euro/USD chart?

I always thought that the control was quoted second.
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