This might have already been discussed, if so I apologize.
In general, what is the effect of the NFP report, or any other large USD news item, on this pair?
I'm making the following (very broad) assumptions:
If NFP comes out positive, this helps the Dollar. This should mean....
1. GBP/USD decreases in value, as the dollar strengthens
2. USD/JPY increases in value, as the dollar strengthens
Now, since GBP/JPY is essentially a combination of these two pairs, would the net effect be that they cancel each other out? Again, keeping this very general, and I'm not taking the carry trade into account for the purposes of this question. Can we essentially disregard US news items when trading GBP/JPY?
Thoughts?
In general, what is the effect of the NFP report, or any other large USD news item, on this pair?
I'm making the following (very broad) assumptions:
If NFP comes out positive, this helps the Dollar. This should mean....
1. GBP/USD decreases in value, as the dollar strengthens
2. USD/JPY increases in value, as the dollar strengthens
Now, since GBP/JPY is essentially a combination of these two pairs, would the net effect be that they cancel each other out? Again, keeping this very general, and I'm not taking the carry trade into account for the purposes of this question. Can we essentially disregard US news items when trading GBP/JPY?
Thoughts?
Disregard all prognostications.