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Are there any correlations between stock market indices and currencies?
As a matter of fact, yes. For instance, there is often a correlation between the rise of the US Dollar and strong gains in stock indices like Dow Jones, NASDAQ, and S&P500. Similarly, a correlation has been observed between the Nikkei stock index and the Japanese Yen.
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How to use CDS in forex fundamental analysis?
The value of CDS used as tool for fundamental analysis is based on the sovereign CDS. The current value of sovereign CDS can be used to predict the direction of currency movement of a country in the future. The higher the CDS of a country, the higher the risks of those countries. For example, the European crisis that happened in Eurozone worried investors and market analysts. It means the crisis influenced the value of CDS. Therefore the risk of bankruptcy would increase exponentially. It is due to the lack of investor's confidence in the value of those countries' currencies.
In the picture above, we could see 5-year CDS from Portugal, Greece, Italy, and Spain experienced sharp increases in February 2012. It showed that in medium to long-term, the crisis in Europe was still going to be the main news and could possibly crush Euro. We could see how the crisis affects Eurozone economic recovery, and consequently, the Euro.
Continue Reading at The Most Accurate Fundamental Analysis
Is it important to know major banks' FX positions?
Knowing major banks' FX positions can be important for certain traders, as it provides insights that can help identify low-risk, high-reward, and high-probability entry points in the market.
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How to keep track of forex interest rates?
The only way to know the change of interest rates of any major country is by monitoring the economic calendar. Besides, the released schedule of the interesting announcement of central banks, which is released once a month, is also important. The demand for a currency will be very sensitive to the central bank interest rate. Traders using certain strategies like carry trade pay the most attention to the news of interest rates changes.
Continue Reading at Everything You Need to Know About Fundamental Analysis
