Only sort of....The relationships hold if everything is static. The fun is when something unusual happens. Suppose on a nice quite Sunday night, somebody decides he just has to have to buy a few billion Euros using Yen.
This may go back to what Vikrant said-banks want dollars because it's the world's reserve currency so in this case the Yen are converted into Dollars first and those Dollars are converted to Euros.
That seems to be what happens when carry trades unwind with equities. High yielders are converted to Dollars and Dollars are converted into Yen.
This may go back to what Vikrant said-banks want dollars because it's the world's reserve currency so in this case the Yen are converted into Dollars first and those Dollars are converted to Euros.
That seems to be what happens when carry trades unwind with equities. High yielders are converted to Dollars and Dollars are converted into Yen.