5 min, 1 min, only when the news hit this Friday they got divorced real bad the pound flew up and the index went down , but most of the time they behaving the same, when i see the pound reversing i know that the index is reversing. its sux i cant put pictures here
I do not understand how the global economics work, you are correct though. Here is a quote from a site I found "Japanese funds have been invested in US Treasuries and equities, they will go down when the Yen carry trade is unwound but the speed and extent of those price changes are unknown." So this quote means that hundreds of billions of U.S. $s worth of Japanese funds have been put into U.S. equities. So, when the carry trade, GBP/JPY for instance, buys back their JPYs they are in effect taking them from United States markets and other global markets? Causing them to go down with it? Which comes first? The carry trade or GBP, doesn't just correlate with SAP, Hong Kong, London, Europe all go up or down with U.S. or U.S. goes up or down with them. Thus they are also somewhat correlated with the carry trade or GBP as is in your title.
There are many more here that are far better read than I, I am still trying to understand the global effect on U.S. markets (global economic growth etc) and the effect on correlating to carry trades.
I do not understand how the global economics work, you are correct though. Here is a quote from a site I found "Japanese funds have been invested in US Treasuries and equities, they will go down when the Yen carry trade is unwound but the speed and extent of those price changes are unknown." So this quote means that hundreds of billions of U.S. $s worth of Japanese funds have been put into U.S. equities. So, when the carry trade, GBP/JPY for instance, buys back their JPYs they are in effect taking them from United States markets and other global markets? Causing them to go down with it? Which comes first? The carry trade or GBP, doesn't just correlate with SAP, Hong Kong, London, Europe all go up or down with U.S. or U.S. goes up or down with them. Thus they are also somewhat correlated with the carry trade or GBP as is in your title.
There are many more here that are far better read than I, I am still trying to understand the global effect on U.S. markets (global economic growth etc) and the effect on correlating to carry trades.
It's all about the risk. Let me expound upon this. Because of the recent low volatility in not only U.S equity markets but in European, and Asian equity markets, it makes sense for Japanese investors to sell Yen in exchange for Euros, Pounds, and Dollars, and then take those Euros, Pounds, and Dollars and invest in them in the respective equity markets for those currencies. So not only do they get gains from the carry trade and the appreciation in currency they are looking for additional gains from those equities. As the equity markets become more volatile the risk premimium for the entire carry trade proposition becomes more than a lot of these investors/speculators can tolerate. If anybody has been involved in the carry trade for any length or time they've made a nice gains. In times of uncertainty it's obvious that many market participants are taking their gains off the table by unwinding their equity positions and converting their currency transactions back to the Yen.
At this point in time NOBODY knows how bad the sub-prime mortgage and corporate bond problems in the U.S are. And nobody has yet seriously discussed the "D" word, derviatives. These deriviates are based on either mortage or corporate debt. If we start hearing about problems with major investments banks suffering loses from mortgage backed or corporate debt derviatives my prediction is we've have a market panic unlike any we've seen in recent memory. From a traders' standpoint this a a great time to be in the market.
Whatever happens in the whole sub-prime, and corporate debt markets and equity markets will be reflected in the currency markets.
very interesting , which i noticed that sometimes you can get heads up on the trades you carry , which i did for some times now , sometimes the gold acts synchronized with the dollar pound, and sometimes you have 3 to 4 hours heads up pritty cool you gotta see this. but the correlation with gold and the currency i understand.
