Equities drive currencies?

[forexpipz]

Hello traders. Could someone please explain to me or point me in the right direction regarding how it is that equities drive currencies.

I'm relatively new to trading forex and its the only instrument that i have traded but I have come to realise that following just the forex market alone doesn't tell the whole story.

Someone said to me that the carry trade plays a big role in currency movements but its all a little confusing. I know how the carry trade works but i'm very confused how the adage equities drive currencies works. Could someone give me a concrete example in real terms please with examples that preferably include stock. A little long winded i know but posting here will save me days of reading articles on line.

Thanks traders.

 

[vergis92]

Hello traders. Could someone please explain to me or point me in the right direction regarding how it is that equities drive currencies.

I'm relatively new to trading forex and its the only instrument that i have traded but I have come to realise that following just the forex market alone doesn't tell the whole story.

Someone said to me that the carry trade plays a big role in currency movements but its all a little confusing. I know how the carry trade works but i'm very confused how the adage equities drive currencies works. Could someone give me a concrete example in real terms please with examples that preferably include stock. A little long winded i know but posting here will save me days of reading articles on line.

Thanks traders.

There's no clear, lasting correlation between a currency and a commodity
except few like canadian dollar and crude oil,
I'm into eurodollar trading, correlation comes and goes from time to time,
I know that the recent dollar rally was largely due to a falling stock market,
credit crunch and economic slow down uncertainty made them pull out money
from Crude and stock markets and into gold and US dollar, the US dollar is seen
as a 'safe place' in uncertain times... but if the crisis is of different nature
such as a gulf war you can see both gold and crude rising,
so as long as the US markets trade normally, regardless of direction it don't
matter to my short term Eurodollar positions, usually 3 to 10 days positions



Finally don't bother with carry theory if you are short term oriented,

 

[forexpipz]

Falling stock rising dollar

There's no clear, lasting correlation between a currency and a commodity
except few like canadian dollar and crude oil,
I'm into eurodollar trading, correlation comes and goes from time to time,
I know that the recent dollar rally was largely due to a falling stock market,
credit crunch and economic slow down uncertainty made them pull out money
from Crude and stock markets and into gold and US dollar, the US dollar is seen
as a 'safe place' in uncertain times... but if the crisis is of different nature
such as a gulf war you can see both gold and crude rising,
so as long as the US markets trade normally, regardless of direction it don't
matter to my short term Eurodollar positions, usually 3 to 10 days positions



Finally don't bother with carry theory if you are short term oriented,

Still unclear. If indices go down then surely money is coming out of US by liquidating positions in favour of investment else where - yet simoulataneously dollar strength is not letting up. This is confusing. Is it not a usd strenghening but a more forceful downtrend in euro land inc. gbp?

 

[spxpro]

Hello traders. Could someone please explain to me or point me in the right direction regarding how it is that equities drive currencies.

I'm relatively new to trading forex and its the only instrument that i have traded but I have come to realise that following just the forex market alone doesn't tell the whole story.

Someone said to me that the carry trade plays a big role in currency movements but its all a little confusing. I know how the carry trade works but i'm very confused how the adage equities drive currencies works. Could someone give me a concrete example in real terms please with examples that preferably include stock. A little long winded i know but posting here will save me days of reading articles on line.

Thanks traders.

If you are serious about trading forex then you should not be concerned about what drives the markets ,accept that all markets are driven and trade accordingly, learn to follow rather than forecast and you will find yourself on the right path.

spxpro

 

[Rhody Trader]

Still unclear. If indices go down then surely money is coming out of US by liquidating positions in favour of investment else where - yet simoulataneously dollar strength is not letting up. This is confusing. Is it not a usd strenghening but a more forceful downtrend in euro land inc. gbp?

It's a complex thing, and oft changing. At the current time, however, the dollar is benefiting from a couple of things. One is the flight to quality in US Treasury securities. Seeing 0.05% yields on short T-Bills indicates this. The drop in oil and gold are related, though it's a cart and horse thing at times. There's also the major consideration that it's clear other global economies are slowing down, meaning interest rates around the world are starting to come down. That's a reversal of the part of the situation which lead to the dollar's decline in the first place.

Speaking to your stock scenario, keep in mind that money coming out of stocks doesn't have to leave the dollar. It could go to cash or fixed income or commodities.

 

[Sluggy]

Speaking to your stock scenario, keep in mind that money coming out of stocks doesn't have to leave the dollar. It could go to cash or fixed income or commodities.

Exactly.

 

[Doctor Leo]

Let me offer you a simple experiment: plot the 30-min chart of euro/usd, T-Bonds and BUND, with trading sessions synchronized and you'll see one simple and wonderful thing.