Anyone paying attention to the fundementals?

As you can see if you have been eyeing the market for the last hours. Somethings up.

The dollar is getting stronger in especially EURUSD and USDCAD.

A crazy day for the financial markets of the US as they are all closing negative 2ish%. Markets in Europe aren't doing great either.

So how does all this work?

I am guessing the markets in Europe are dropping due to the Greece cut. But, why does the US Markets, S&P500, NASDAQ etc also drop?

While gold becomes a safe haven I am guessing and people start investing in that and the price of that is up like 1.5%. Whats the deal, I can't seem to figure out a relation between them all.

How does, the negative close of US financial markets, affect the dollar by giving it strength? Boggling.

When US stocks are down, we assume they are sold more than purchased. When they are sold, money flows into US dollars (essentially dollars are being purchased instead of stocks).

The sale of stock shares is denominated in dollars. You give someone 100 shares of MSFT, they give you US dollars. You bought dollars. If everyone is "buying" dollars today, the dollar goes up.

Lately, there is some correlation between the US stock indices and the EUR/USD... when the markets go up, money is flowing into stocks, out of dollars. EUR/USD goes up --> because dollar is weaker.


This is just one of many facets of the complexities of currencies. You can of course watch the Dollar Index, S&P Index, DJIA, and the Nasdaq...as well as overseas markets when they are open. But you may go insane! It is just easier to NOT predict and decipher, follow the pack as much as possible.

Disclaimer: I am not an expert nor economist, just a somewhat amateur short-term recreational scalper.

Side effects of overtrading or overanalysis may include:
"Itchy rashes... Full body hair loss... Projectile vomiting... Gigantic eyeball... The condition known as "hot dog fingers"... Children born with the head of a golden retriever... Seeing the dead... Bone liquefication... Possession by the Prince of Darkness... Tail growth... Elderly pregnancy"

The dollar is also a safe haven. Gold indeed rallied, but look at the two biggest gold-oriented currencies, AUD and CAD - they both fell against USD and JPY. USD is king today. Actually, JPY is king today, USDJPY fell, but USD is at least prince.

But technically, a lot of instruments were primed for today's move anyway; the various markets just needed an excuse. EURUSD was dying to break down and the major equity indexes were all at some form of resistance.

Rob

How did you come across that info that equity indexes were at some resistance?

and thanks for your input Intu.

I just looked at my charts. If you don't have an equity account, you can use bigchartsdotcom or stockchartsdotcom. They're all at some combination of their Monthly 50sma, Monthly upper Bollinger Band or a previous resistance level. Look at IWM, a Russell ETF: $75 was like a stone wall (with titanium re-bars) in 2008.

Rob

Yeah, markets are kinda like that these past few months. And as someone already mentioned, EURUSD and American equities are now starting to get a little more correlated than normal.

But traders do need to pay attention to the Fundamentals, as much as they need to pay attention with the Technicals.

ive actually read some articles before regarding this issue. ideally, when an economy is improving, its currency and stocks usually simultaneously rise. however, due to some externalities such as risk appetite and aversion, they tend to move in opposite direction. now however, both seem to move in the same direction.