Does the EUR/USD follow US stocks or vice versa?

Discussion in 'Trading' started by tradingcards, Aug 10, 2011.

  1. I noticed an intra-day correlation (3min chart) between the EUR/USD and US indexes (DJIA, NASDAQ). I was wondering which one causes the other or if anyone could elaborate on this phenomenon.

  2. Where have you been for the last 5 years?
  4. piezoe


    leads or mirrors. (usually :D) In a market whose main driving force is inflation, essentially the way its been for the last ten years,with brief interludes of crazyness, you can expect the market to be quite responsive to the relative value of its face currency versus the world's other major currencies. Thus when the dollar drops the U,S. market rises and vice versa. News driven excursions briefly interrupt this pattern from time to time. The interruptions tend to be short lived. Thus Fed policy relative to other major central banks becomes magnified in importance in economic doldrums, or so we imagine. But in reality, the Fed raises the spinnaker and it begins to luff while some other central bank is giving the genoa a whirl but to no avail, the wallowing continues. Meantime the government has cranked up the diesel and is motoring away from us into the Bermuda Triangle, while we continue to wallow in the doldrums. Get out the sunscreen, i say, and enjoy life.

    When real earnings drive the market, if they ever do again, this joined at the hip reaction to the currency could get severed. Most of the earnings increases we see nowadays are either due to inflation or conversion of earnings in a stronger currency to be reported in a weaker currency. Real earnings increases have been minor on average, as you would expect during hard times, which i've heard referred to as a "recession".

    But now the good news. Iv'e heard the government is hiring.:D
    But keep a strobe light strapped to your arm in case the government boat springs a leak. The Triangle is not friendly to swimmers.
  5. It depends...
  6. Sometimes they move together and at other times one leads the other. Tell no one when you discover THE lead indicator unless you want the men with the white coats to show up.