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Old 09-02-2011, 06:57 PM
 
Location: Dublin, CA
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This is a general question, for I know nothing about about international finance. I am going to Europe, for 10 weeks. I've been keeping an eye on the Euro and seems to me, when the stock market goes down, the dollar gains against the Euro. When the stock market goes up, it loses against the Euro.

Am I wrong? If I am right, why is this? It just doesn't seem "normal." You would think the stronger the US economy, the stronger the dollar?
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Old 09-02-2011, 06:59 PM
 
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It surprises me, too. You would think the crises in Greece and Portugal would bring down the Euro, but it defies gravity.
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Old 09-02-2011, 07:19 PM
 
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The U.S. dollar is considered a currency safe haven. When things go array, domestic and international investors rush back to the dollar. This is due to growth being in the emerging markets and the fear that historically U.S. recessions have dragged down all economies. Despite the Euros troubles, we're in just as bad of shape as the weakest European countries. Only difference is that the Fed is printing money and buying bonds. Without the Fed...we're bankrupt also.
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Old 09-02-2011, 07:27 PM
 
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Quote:
Originally Posted by pvande55 View Post
It surprises me, too. You would think the crises in Greece and Portugal would bring down the Euro, but it defies gravity.
Because in terms of the overall Eurozone economy, Greece and Portugal are peanuts. It is like Vermont and Alabama going bankrupt in the USA. It is an irritation but not terminal.

The reason the Euro stays strong against the dollar is because their core economy is stronger and the core countries like Germany or Benelux are not carrying the sort of fiscal deficit that we are. The Eurozone also does not have the kind of political gridlock that we are seeing in the USA. That makes for a more stable environment and investors like that.
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Old 09-02-2011, 07:28 PM
 
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Quote:
Originally Posted by fitz99clem View Post
The U.S. dollar is considered a currency safe haven. When things go array, domestic and international investors rush back to the dollar. This is due to growth being in the emerging markets and the fear that historically U.S. recessions have dragged down all economies. Despite the Euros troubles, we're in just as bad of shape as the weakest European countries. Only difference is that the Fed is printing money and buying bonds. Without the Fed...we're bankrupt also.
Right now, the safe-haven money is going into the Swiss Franc and gold, not the dollar.
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Old 09-03-2011, 10:12 AM
 
Location: Here.
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By "stock market" I presume you mean "US stock market"? The US stock market and European stock market follow each other, so I don't think that it is safe to correlate the US stock market to the Euro without taking into acount the US stock market's correlation to the European stock market and the European stock market's correlation to the Euro.

(Or am I completely missing your point? )
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Old 09-03-2011, 05:23 PM
 
Location: Dublin, CA
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Originally Posted by Retroit View Post
By "stock market" I presume you mean "US stock market"? The US stock market and European stock market follow each other, so I don't think that it is safe to correlate the US stock market to the Euro without taking into acount the US stock market's correlation to the European stock market and the European stock market's correlation to the Euro.

(Or am I completely missing your point? )
Yes. I do mean the US stock market. It seems when it's down, the dollar is stronger against the euro and vis versa. Just trying to figure it out.
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