Can someone explain why the falling dollar causes Wall Street to rise?

I’m a newbie in FX, I’d really like to understand why Wall Street and Commodities are currently on the up swing, apparantly due to a falling dollar? What is the connection?

Thanks
Alan

The Yen carry has been replaced by the [B][U]Dollar carry trade[/U][/B] which is the cause behind the effect of rising commodity prices.

The price rise is [U]speculator driven[/U] as fundamentals in many of these markets do not support prices at current levels.

Demand for the real product however, which in some cases has not been particularly impressive, is being supplemented by [U]speculative demand[/U] [U][I]which is forcing commercial hedgers to back away from many of these markets.[/I][/U]

Same principle aka speculator driven applies to equities aka Wall Street.

Well, I’m sorry, I’m not at an advanced enough level to understand this reply. I need a more basic explanation for a newbie… Thanks!

I just want to know why the rise on wall street is due to the falling dollar — i realize that commodities are rising due to the fact that they are cheaper to purchase with a cheap dollar…but the markets as a whole?

Financial Institutions aka Wall Street banks are stuffed to their eyeballs with “Money for Nothing” from the FED.

These institutions either lend out some of that money for minimal interest rates or do it themselves.

That “Money for Nothing” denominated in USD is used to buy Equities and Commodities. With the intention to drive the price UP.

They then SELL Commodities and Equities and pocket the difference of what they have to pay back in USD and the SELL price of Commodities and Equities.

The more “Money for Nothimg” floats around the more the USD falls.

It’s called inflation aka expansion of monetary base.

I need a very basic explanation, or a link to an explanation somwhere. None of what you say makes sense to me, I’m not up to speed on all the workings of macro economics.

I need a step by step explanation on why the declining dollar is causing an upward movement in the markets… just very basic, as if explaining to someone who is not well versed in economics.

Thanks
Aqn

The declining dollar is not necessarily causing the rise in the stock market. Their is a relationship but its not always going to be “dollar down stocks up”. A great week on Wall st. could be caused by allot of things, a falling dollar can be caused by allot of things.

If you can find a relationship as cas has for a particular situation you can use it in your fundamental analysis. It wont always be a direct correlation (or inverse correlation). Way to many variables to be that simple.

I am no expert just my observations;) learn your facts from someone who knows what they are talking about.

I am sure you do not want to hear this…:slight_smile:

What is happening right now got [B]nothing[/B] to do with real world economics by itself.

It has all got to do with monetising of debt…called Quantitative Easing…aka monetary policy.

You find a basic explanation of QE here…

Quantitative easing - Wikipedia, the free encyclopedia

There is no manual. If there would be one most traders would be fabulously rich in no time. :smiley: