Okay, so last week finished weakly for me. I ended the week tired and with a loss of motivation. This week, however, is starting out strongly, as I am excited about the economic news coming out. We have reports on consumer confidence, housing, investor sentiment, consumer sentiment, durable goods, manufacturing, and GDP. What the impact of these reports will be, well, we will see … Perhaps, though, the largest impact on the markets this week could be the words coming out of Bernanke’s mouth on Wednesday. What will that boy say, and how will the markets respond? Anyway, the question today has little to do with the reports, but it does point to the same issue, which is cause and effect in the markets …
I would like to know what trades in step with the U.S. dollar and what leads the U.S. dollar. I’m new to this website. Can you give me some clues on how to use this site?
Sorry, but you should not have to ask this question about the U.S. dollar, as the U.S. dollar is a fundamental indicator of both economic and market activity. To ask this means you need to learn one of the basic fundamentals of trading – understand the big picture, and, without a doubt, the U.S. dollar is an important part of the big picture.
For example, a strong U.S. dollar impacts every international business. A strong dollar means it is more expensive for American companies to sell goods and services abroad, and it means imported goods will be cheaper. This is good for consumers, but bad for businesses. Think about how this affects the U.S. economy and trading markets, such as forex, commodities, and equities.
In today’s marketplace, the U.S. dollar is exerting influence in two other ways – the correlation trade and the carry trade. One should understand both of these concepts if one wants to understand the big picture. The correlation trade directly relates to the question above, and it has to do with the relationship to both commodity prices and equity prices. The carry trade relates directly to current U.S. fiscal policy – cheap money. If anyone wants to know the specifics of these trades, then go to your favorite search engine and look them up. Learn. Learn. Learn.
Speaking of learning, the best way for the questioner to use this site is to take advantage of the free educational materials, such as the e-books, webinars, and live seminars. Some truly lucid, thoughtful, and credible folks develop the educational materials, so start there. For everyone else (including the questioner), the commentaries are wide ranging and insightful. Again, some well-known names are behind the commentaries, and one can agree or disagree with their points of view, but one cannot dispute the knowledge behind the commentaries.
Finally, if you are socially minded, or you want to have some fun, check out the Community section of the site. There you will find interactive activities (such as this) that will help you become a better trader, allow you to participate in charitable causes, and expose you to some “Fun Stuff,” such as stock-picking contests, wild and offbeat videos, and polls. Check it all out.
Trade in the day; invest in your life …
