why did EUR/JPY drop during NFP? - Page 4
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Thread: why did EUR/JPY drop during NFP?

  1. #31
    Quote Originally Posted by ;
    What if this EUR increase against the USD was made by the banks in the US, who sold a lot of USD and bought YEN?
    After all there is not any way for the feds to decrease the interest rate, because with that they will ruin the whole country's economy. Remember it is about the present, the future is a lot more important.
    Fridays sell from the USD I see it as a buble on the stock market. Simply untrue. Next week should go back if futher down where it had been. Meaning strenghtening USD.
    On the other hand when the US is going to play at a way to completely destroy its own economy that will weaken the USD, a lot, then the only way out is a warfare. Israely planes are already shot at by syria. Israel threatens Iran of placing her down, which I don't know they will do without US help. Truly even the US will have to fight with a plus big lot against Iran. On the other hand if this war happens, it'll be a one involving nations and all continents. I suggest, that most of us who make money from Forex, look for something else on the market to earn money, cause I don't think Forex will be tradeble for besides banks .
    Alright, it was a joke, so don't get carried away nonetheless.
    But I have a feeling that it was not the ECB who travelled against the USD on Friday. But instead it happened from within the united states. Banks have problems to correct, and these problems can be repaired only with lots of money. The Fed can't correct this issue for them, as with a rate cut would be only momentary. Apart from with a rate cut inventory could fall thousands of things because global investors would have no interest in keeping or investing their money in here. And that would bring the US into recession, big time. Right now the market will go quite bad until one of the banks pups upward as went to bankruptcy.
    But hey I am not an economist. I might be giberish here.

    Regards...
    Hello attrium,

    I'm not an economist either, however I try to consider how someone with millions/billions of dollars in the market may react to different conditions. Speculation is based on expecting market reaction which is usually predied on individual emotion (that's where TA is therefore instrumental to trading. . .FA provides us a long term view to frame our decisions, and if you have super deep pockets, build positions around).

    Global markets have been intrinsictly connected. If one major economy fails finally other markets will collapse as well. The US economy is instrumental in almost every other (who'll buy from China when the US consumer can't buy? . . .Canada. . .the US is the biggest trade partner. . .and a weak dollar strong loonie impacts Canadian Corporate Profits. . .good for their economy?) . Total a weak dollar is good for the US at the moment. Why? As it contributes to higher quantity of oversea sales. . .which in effect could cause more earnings to US businesses ). Totally off-subject...

    whom I want to go w/this post is your interest rate cut and the stock market. Interest rate cuts are usually bad for currency valuation BUT is generally positive for the stock market! It's a reverse relationship (normally). Why? Because Corporate Profits are usually higher when calculating costs decrease. Higher profits = higher stock values. Based on strict fundamentals, there isn't any reason for the carry trade to unwind. Fundamentally, the egy is still legitimate. However, the egy depends on long term stability. Long-term stability requires low volitility and high liquidity (will this happen w/interest rate cuts?) . Is this? Is the VIX under 20? Is your Yield on short-term bonds falling? How do you see speculators reacting to a possible monetary loss (keeping in mind, markets have a brief term memory)?

    Then, consider the international scale. . .do you think that the BOE or even ECB will continue to increase rates on the short term when the US is undergoing bandwidth problems that could spread? Who will buy their goods/invest in their markets and how do they get it done? Can you believe that each bank acts without considering the viability of their spouses economic problems? Why not the BOE or ECB increase rates w/their past meeting? Again, how will the fund managers market participants react to actions?

    When trading currencies, both basic FA theories are interest rate differentials and Weak economy/Strong economy. When these theories are fulfilled, but prices are not acting so -- what does it mean? How do we exchange it? Again, TA -- that the charts will tell us the way market participants are behaving. Correlations can diverge and it is possible to have U/J go 1 way and E/J and G/J and A/J proceed in different directions....especially considering assumption 2 of FA: Strong/Weak (Aud is Strong/US is Poor. . .how many will speculate there? Then hypothetically, little change with U/J aside from transactions to convert to AUD). Nothing functions. . .everything is intertwined. The idea process can drive you insane and overwhelm. The step imho, right now, is much FEAR exists in the marketplace. FEAR will cause a decrease in carry pairs (temporarily?) Until logic comes back and the participants realize nothing fundamentally has changed -- if that is indeed the case.

    Personally, I simply think Fear. . .is it there? If so, Carry's unwind accross the board. If not, then they stabilize and grow....Then I search for GREED. It's not necessary to measure the correlation. . .Just search for the paths on the charts. I'm short term trader.

  2. #32
    These explanations regarding the EURJPY falling with a US feeble economy may be partially accurate, but I don't see the corellation between the largest fall in almost any currency that I can remember, 716 pips, 5 TIMES it is daily average.

    The stock market has taken big hits before and NFP has given poor numbers before: nevertheless we have never seen anything like 9-4-08. There MUST be extra motive or another. I understand BOJ intervenes sometimes. . .does anyone know how to confirm intervention?

  3. #33
    Quote Originally Posted by ;
    These explanations regarding the EURJPY falling with a US feeble market may be partially accurate, but I don't see the corellation between the largest drop in any currency that I can remember, 716 pips, 5 TIMES it's daily average.

    The stock market has taken big hits before and NFP has contributed bad numbers before: still we have never noticed anything like 9-4-08. There MUST be another or motive. BOJ intervenes is known by me sometimes. . .does anyone know how to confirm intervention?
    There's no one occasion like'an intervention' that will give you the keys to the city. The carry trade is an ongoing event because of the differential in interest rates between JPY and EUR. It's a little more complex than that, but for now both Sterling and the EUR are feeling some stress so folks are realigning their money. The G/U also dropped in August - 2500 pips because 8/6.

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