How does the stock market affect the forex market?

Hey guys,

I have gone through lots of information regarding the correlation between stock and forex markets but it seems that none of these stuff turns out to be useful for me and I am still very confused.

My question is: if XX main stock indexes go down, does that mean XXX/XXX pairs could go down as well? and in which way should I make use of it? (Things like forecasts based on it)

Thanks.

It is hard to trade this correlation data on short timeframes but as a general rule:

The US and therefore JPY's long term movements are usually inversely correlated to the equity markets. You will notice that at times when it is 'risk off' - money flows into the us and jpy currencies and out of equities.

You will find that the aussie is directly correlated to the equity markets. I am not as sure that the correlation holds as strongly for eur/chf and gbp but usually it will.

Bond market & interest rates drive all other markets. Its important to separate causation from correlation.

the economy affects interest rate expectations which affect currencies
liquidity affects currencies
the risk on/risk off lemmings affect currencies
commodity prices affect currencies and the above affects the USD which basically affects all commodities.

correlations tend to increase during the worst of times. which is basically the risk on/risk off lemmings running around.

I found it very funny that when main EUR stocks markets go down, EUR actually goes up.. How to explain that?