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Old 03-21-2007, 08:41 PM
scogeil's Avatar
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Default Is this common?
I was just looking at my charts and I noticed that as the GBP/USD and the EUR/USD were rising, the USD/JPY, USD/CHF were dropping. This all took place simultaneously. Does this happen often?
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Old 03-21-2007, 08:47 PM
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Most of the time. EUR/USD and USD/CHF have a high inverse correlation. This means when EUR/USD moves up, USD/CHF moves down.

The GBP/USD and USD/JPY are also correlated but its weaker. Be careful with thiese two pairs though, their correlation tends to "uncorrelate" at times.

Actually they all do.

Here's a good overview on currency correlation, Currencies correlation - Mataf.net
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Old 03-22-2007, 10:28 AM
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There is a much simpler explanation than talking about corellations.

EUR/USD and GBP/USD both represent non-USD based pairs. That means they will rise as the USD falls, and vice-versa.

USD/JPY and USD/CHF are USD based pairs. That means they rise when the USD rises, and fall when it falls.

When something happens that impacts the USD specifically - like a data releases, news item, interest rate announcement - you will see the sort of move you saw. If it's a good thing for the USD, EUR/USD and GBP/USD will fall while USD/JPY and USD/CHF rise. If it's bad news things will be reversed.
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Old 03-22-2007, 10:56 AM
 

Join Date: Mar 2007
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Quote:
Originally Posted by scogeil View Post
I was just looking at my charts and I noticed that as the GBP/USD and the EUR/USD were rising, the USD/JPY, USD/CHF were dropping. This all took place simultaneously. Does this happen often?
It is not happening always,
But 60% it has happend like that. Remaining 40% risk is there.
For example:There is good news for GBP,EUR means these are rising againist the USD. At the same time there is unfavourable news from JPY then USD has rising against the JPY. It has proven in previous.

so

Take care before taking action.

Thank you for sharing views.
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