eurusd today....

[munchiedude]

hi all,

i was wondering what was going on with the eurusd today....america announces positive results on the jobs front, the ftse reacts positive, was expecting the euro usd to go down but it also goes up?

in this, i do not understand the reason behind people still buying euro and selling dollar?

can anyone clarify?

 

[scose-no-doubt]

positive numbers painting better economic picture leading to "risk-on" flows and lending strength to eur?
Worse number estimates priced in previously and markets correcting?
Short term volatility?

List is endless.

 

[BeginnerJoe]

EUR has fallen sufficiently on the longer term trend. Now it goes up.

 

[munchiedude]

positive numbers painting better economic picture leading to "risk-on" flows and lending strength to eur?
Worse number estimates priced in previously and markets correcting?
Short term volatility?

List is endless.

thanks for your reply. in this example, the better economic picture is with the american economy and not the eurozone so why would people be buying the eur and selling usd?

 

[munchiedude]

EUR has fallen sufficiently on the longer term trend. Now it goes up.

my understanding is that nonfarm payrolls are a high impact news event that is inversely correlated to the eurusd.

whilst i appreciate that eurusd has been under a lot of pressure as of late, im surprised and cannot understand why positive USA data increases the value of EURUSD.

 

[BeginnerJoe]

The news could be in the price already. If the market was over-optimistic in its anticipation of a strong USD, it will now correct itself. It's a mug's game trying to find a strong correlation between news and the price. Those in the know would have acted long before you get your chance. You will notice the EUR began rising a few days back, which to me indicates preknowledge of the news.

 

[munchiedude]

The news could be in the price already. If the market was over-optimistic in its anticipation of a strong USD, it will now correct itself. It's a mugs game trying to find a strong correlation between news and the price. Those in the know would have acted long before you get your chance. You will notice the EUR begain rising a few days back, which to me indicates preknowledge of the news.

ahh, that explains it, thanks for that joe. nah, im not finding correlation between news and price. its just that i normaly notice this inverse relationship, but today's move was different to normal moves and thought i'd ask!

 

[BeginnerJoe]

Well, all the correlations I thought existed was out of whack over the past few days. So I am now of the view that correlations/relationships are bollox and cannot be relied on. Back to the drawing board.

 

[scose-no-doubt]

thanks for your reply. in this example, the better economic picture is with the american economy and not the eurozone so why would people be buying the eur and selling usd?

Could be that improved conditions in US are expected to be reflected elsewhere also.
Non arb principles mean that some indices usually stay within a certain range of each other and will exhibit high correlation. Consider the use of ADRs on US exchanges for example.

The timing of the move may also explain it. Maybe you're now seeing sentiment exhibited by US traders where it was all London action beforehand. Who knows?

Maybe dollar holders see this as an opportunity to sell off as there may be demand for US stocks.

Many, many things to consider.

 

[scose-no-doubt]

oh and while I' not saying to listen to me, don't ever listen to Beginner_Joe

 

[munchiedude]

Well, all the correlations I thought existed was out of whack over the past few days. So I am now of the view that correlations/relationships are bollox and cannot be relied on. Back to the drawing board.

yea totally agree, its rather unique times atm, im on the sidelines atm, wathcing with baited breath!

 

[BeginnerJoe]

oh and while I' not saying to listen to me, don't ever listen to Beginner_Joe

But people always listen to me because I am extremely convincing. So, no use telling them otherwise.

 

[scose-no-doubt]

convincingly queer.