Stocks can affect currency trading on the FX market
One of the bits of forex news right now is that equity markets are affecting currency trading on the FX market. Forex trading strategy should take into account the fact that when stocks gain, it can mean an increase in risk appetite, which can lead to riskier trades, such as the carry trade, helping higher yielding currencies. Reuters reports on the connection between equity markets and forex trading:
"There is a big debate in the markets as to whether equities
are due a substantial year-end rally (or not). It has a very
significant impact on risk-taking in financial markets including
currencies," said Teis Knuthsen, head of FX research at Danske
Markets in Copenhagen.
"If we get this equity rally, it will probably result in a
strong dollar and the underperformance of the yen, the Swiss
franc and, to a certain extent, also the euro."
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