Why USD news affecting other currency?

Azlan00IM

Private
Messages
33
I found out that even if the currency pair is not related to USD, EUR AUD for example, it is still somehow being affected by USD news. My position was suddenly reached stop loss in a few minutes. Why is that?
 

WatanFX-Rep

WantanFX Representative
Messages
64
Most currencies are ultimately hedged against the reserve currency which is the US dollar.

It is mostly in the form of receivables/debt instruments, such as the treasury bills, notes and long term bonds.

Every commerce related trade in the world is directly or indirectly, technically or fundamentally, linked to the US dollar.

Please study the bond markets, specifically how credit rating of government bond eventually impacts its respective country's national currency.
 

Pharaoh

Colonel
Messages
19,743
As the dollar whipsaws against other currencies, it's not uncommon to see a quick doji on some unrelated pairs during a major USD news release.
 

AmanK

Recruit
Messages
8
I found out that even if the currency pair is not related to USD, EUR AUD for example, it is still somehow being affected by USD news. My position was suddenly reached stop loss in a few minutes. Why is that?
First of all as we know there are hundreds of currency pairs that are interconnected to each other. Like taking your example we have a pair of EUR/AUD on the other hand we also have a pair of EUR/USD and AUD/USD. Thus any news on USD will make changes with some percentage on the latter currency pairs; the amount of change depends on the type of news. Thus the effect on the latter two currency pairs will automatically affect currency pair of EUR/AUD.
Suppose, due some news on USD the Currency pair of EUR/USD appreciated by 2% and AUD/USD appreciated by 1.5%. Now mathematically cross multiplying the pair EUR/USD = AUD/USD, we cancel the common term i.e. USD. So the net effect on apperception of respective currencies will thus effect remaining pair EUR/AUD.
At the end you should also be concerned about different factors like type of news, country economy, globally affecting factors. We should also look technically and fundamentally what that pair is predicting.
 

nahiyar

Private, 1st Class
Messages
780
USD is major currency all over the world that is why changes in its trend affect on other currencies too. All major currency look like they are interrelated . You can see their daily charts to see effects of one currency to other currencies. USD Is mostly traded currency ,Its low or high positions determine fundamentally and technically other pairs.
 

bigdolly

Sergeant Major
Messages
941
I found out that even if the currency pair is not related to USD, EUR AUD for example, it is still somehow being affected by USD news. My position was suddenly reached stop loss in a few minutes. Why is that?
It's because financial system is a closed circle and such big player as USD will always affect other currencies in case something wrong goes with it. Studying this correlations is one of the most profitable trading strategies you can develop.
So you're on the right way.
 

Ty_jowe

Recruit
Messages
6
USD influence on each currency in the world indirectly. And I think depending on the news situation in pair can change. That means that on some currency that influences more and on some less.
 

arigoldman

Recruit
Messages
169
Most currencies are ultimately hedged against the reserve currency which is the US dollar.

It is mostly in the form of receivables/debt instruments, such as the treasury bills, notes and long term bonds.

Every commerce related trade in the world is directly or indirectly, technically or fundamentally, linked to the US dollar.

Please study the bond markets, specifically how credit rating of government bond eventually impacts its respective country's national currency.
Thank you!
 

margin

Private, 1st Class
Messages
53
USD is the main currency in the world. So the rate of USD determines the rates of many currencies all around the globe. For this reason any major news event related to USD cause a massive moves in several pairs.
 
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