Why should Forex traders care about earnings season in the stock market?

[lucky12]

A very important tip that will make your trading much easier is accepting the simple fact that all markets in one way or another are connected.

However understanding exactly how, will make all the difference.
Often times new or novice traders do not see the correlation between currencies and other markets but the fact still remains we must be sensitive to changes in the environment and what is taking place in other markets.

A quick tip I would like to share is earnings season in the stock market.
Occasionally if there is insufficient economic data or the economic data that is available for the currency market isn’t much of a surprise, currency prices may stay range bound in a consolidated environment.

At times currency prices take their cue from other markets and following the dollar and the effects created by the stock market. We should keep in mind that earnings season can affect the stock market’s overall.
If this occurs on a day of consolidation in the currency markets, it’s possible the stock market and the dollar can effect currency prices which begin their direction with earnings announcements from major corporations listed on the stock market.

While this is not a complete and self-sufficient trading method it is an extremely valuable tip which may give you an advanced warning of any potential moves in the currency markets on certain days when in the above scenario is likely to take place.

I present this information as another explanation as to why currency prices move when there appears to be no reason in sight.


Happy trading,
LC

[ExecutiveIncome2You]

That is very true, stocks, Forex, commodities & other markets are unavoidably connected and they all have an effect on one another.

[globalforex]

Of course they are connected. There is high positive correlation between eur/jpy and S&P for eg. In the past we had a high negative correlation between eur/usd and usd/chf but things have changed. There is great correlation table of all instruments somewhere on the net just google it. When I started in trading I was very interested in correlation (having studied stats) and looked it up. Did a lot of work on it myself too. But today's markets are somewhat different and until it stabilizes correlations will not work as well as before.

[contrarian]

Yep, correlations are in a sense 'relationships'.
Relationships, by their very nature/definition, change

However, the only 'true' correlation, is the fact that whether in, or out of the equity markets, money changes hands.

Money, is the forex market.
It really only needs to be as simple as that.
JMO

[xerof]

Forex trading and stock trading are correlated, both share so many things in common. While forex trading is the buying and selling of foreign currency, stock trading is the buying and selling of stock, equity, bonds, etc.