Excerpt from: Understanding Spread Betting
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| April 18, 2007 | | Stock markets and currency markets affect each other | When it comes to financial markets, there is a lot of interconnectedness. Stock markets can affect currency markets, and interest rates affect bond markets and other financial markets. When placing spread bets, it can be helpful to know how the different financial markets interact. One example of this is how the dollar/yen currency pair interacts with the U.S. stock market, offered by Forbes:
CMC Markets' chief analyst Ashraf Laidi said one way to gauge the
extent of negativity in US dollar sentiment is the failure of the US
dollar/yen pair to rally at a time of a resurgent US stockmarket.
He noted the positive correlation between US stocks and the currency
pair had grown increasingly strong over the past 7 weeks, but added:
'today's decline in the US dollar to under the 119 yen level is
something worth considering.' 'It is not an unwinding of carry trades but simply a case of dollar damage,' he said. | | |
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