How to look good and the bad Money Tips

Category: Money Tips Date: 2007-08-05

The foreign exchange market is always a day filled with a variety of good and bad, how to treat their impact on the market for short-term it is very important to seize the opportunity.

Everything is relative, both good and bad factors are not absolute. At different times, in different market conditions, they are not the same role. For the usual sense of the bad, in the specific market conditions, which may be positive, we need to look at the dialectical. An information generation in the end is a good or bad, it should be decided by the market, rather than our subjective desire to identify.

For example, in early December 2002, the European Central Bank interest rate cut. Generally speaking, a currency to lower interest rates is definitely a negative factor for the euro should be dropped. But at the time, the market's attention focused entirely on whether the U.S. war against Iraq issues. 1.00 euro parity under repeated shocks, upward restless desire to attack, in view of the European Central Bank may lower interest rates, the euro's rise has been temporarily suppressed. The euro interest rate cut, the market that the bad have been released, but before all aspects of the market interest rate cut has already been recognized and has been fully digested. Introduced the policy interest rate cut at this time, we can not call it bad, but there is a advantage of this opportunity is a good feeling. Has been to suppress the power of the market to do more and was instantly excited out of the euro has been steadily rising, before and after a gain of nearly four months, reaching 1.1084 before entering a large-scale adjustments.

From this example we can see, the euro market, lower interest rates have not been considered to be bad, then we should also adapt to market changes. Do not die from a textbook move rigidly applied, guilty of dogmatism. Otherwise, this bo yuan 10 percent of the stock market and you have no chance.

Does not mean that all of the bad We should all be regarded as positive, all the good we all should be regarded as bad. We say that only in a specific time, specific market conditions, will produce such opposite effects.

We cite a positive example.

July 15, 2003, Federal Reserve Chairman Alan Greenspan has done in the White House congressional testimony. Greenspan said he predicted the U.S. economy will grow faster in 2003, the U.S. gross domestic product GDP will increase by between 2.5 to 2.75 percent. And hinted that the first two quarters of this year's economic growth is very moderate, as time goes by, this year's U.S. economic growth will be significantly accelerated. He also expressed readiness for quite some time to keep interest rates low to stimulate sluggish economic growth and to prevent the risk of price decline.

Federal Reserve Chairman Alan Greenspan's testimony has just ended, the market immediately made a positive response. U.S. dollar against all currencies were sharply higher, the dollar index soared once as high as 97.09, the final closing 96.91, to close out a few recent big Yang Xian. The next day, the dollar index rose again, inertia, once as high as 97.45.

Six basic disk down miserable, messy one. Here, we have to be a list of all currency fell the day: at the top of the pounds, down 227 points. Followed by the Canadian dollar, down 164 points. Swiss francs, down 158 points. The euro fell 141 points. Yen down 84 points. The smallest decline of the dollar dropped 71 points. This is an absolute decline in the ranking, if the percentage decline in ranking according to the following results: decreases in first place or the pound fell by 1.4%, followed by the euro fell 1.25%, 1.2%, the Canadian dollar, Swiss franc fell 1.1%, the yen fell by 0.7% , or the smallest or the Australian dollar fell 0.4%.

For the re-emergence of the diving market, we should rationally analysis. At that time non-dollar currencies are in a strong down trend, we must acknowledge this point. Falling trend, any adverse factors, including bad news or the bad data, will become short big reason for the short side.

If there is no Alan Greenspan, the impact of the U.S. congressional testimony, the market will decline in the pace of decline would be more likely to slow, pull a longer duration. The bad news has accelerated the exchange rate fell to one-step, but also reduces down time.

We can make the assumption that if Greenspan's remarks on this in May 2003, when a strong upward trend in the market in which, it just makes Greenspan's speech a short-term market correction, a non - will be down so much that there is no diving market, two difficult to change the upward trend will continue.

We can also do the second hypothesis, if Greenspan's remarks, the U.S. economic future is full of a pessimistic tone, then the day the market will continue the pattern of weak rebound, the same will not be reversed up. Downward trend will continue, but the time it takes to fall in place will be extended. If placed on the May, the market will definitely be there rose market, all of the non-US dollar currencies will be just a few kilometers to heaven. This is the bear market and bull market of them played by news of the impact.

Such a detailed hypothesis, simply wanted to let everyone in the future of the stock market, the right side of the change in the message to do an objective and rational judgments. The good news on the bull market, the exchange rate to rise sharply, the good news put the bear market, the exchange rate will rebound; bad news on the bull market, short-term to the callback, the bad news put the bear market, the exchange rate will fall.

Here we look at ideas to expand further, if a particular currency market may be expected to cut interest rates, low interest rate of the currency movements would of course have a very negative impact. If the money released by the host country economic data, showing the signs of inflation that may arise, for example, the producer price index, consumer price index rose, so that the data under normal circumstances would cause the currency exchange rate fell. Might be expected to cut interest rates in the market circumstances, such as data dissemination can only be the market that the currency may reduce the rate cut is positive data. So not only will not fall Quotes, it will rise.

We have repeatedly cited such examples, is to let your bad and good to have a dialectical view. Any data, the message should be placed in a specific time and space and placed in a specific market, the comprehensive judgment analysis, in order to obtain in the end is a bad or a good conclusion. The data and messages with their judgments in the end is bad or good, not as many investors see the market reaction to it, this is the influence the market behavior of investors in the sale of the source.