I received an email from Seow who wrote:
Is there a correlation between Forex and the Dow Jones / Standard & Poor’s (S&P)? How do I read the numbers and translate it into Forex trading?
There is no obvious correlation between the Dow Jones / S&P and the Forex market.
On a short-term basis, the Dow Jones / S&P can give a general feel of the risk appetite of the market. When the Dow Jones / S&P rises, most likely, the risk appetite of the market also rises, and vice versa.
Forex is traded in pairs, when risk appetite increases, we need to know which currency is likely to appreciate, and vice versa. At this moment, the most prominent currency likely to benefit from increasing risk appetite is the AUD. But the AUD is also affected by the situation in China, which is Australia’s largest trading partner.
There is no simple and straightforward answer to your question. This is why I set up a team of market analysts to produce weekly and daily reports for the benefit of all traders, especially clients of FXPRIMUS.
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