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Author: misamaliraza94

  • How Oil Moves with USD/CAD

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    misamaliraza94
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    Let’s talk about the other kind of gold… the black one. As you may know, crude oil is often referred to as the “black gold” or as we here at BabyPips.com like to call it, “black crack.” One can live without gold, but if you’re a crack addict, you can’t live without crack. Oil is…

  • How Gold Affects AUD/USD and USD/CHF

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    misamaliraza94
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    Before we detail the relationship between the comdolls and gold, let’s first note that the U.S. dollar and gold don’t quite mesh very well. Usually, when the dollar moves up, the gold falls and vice-versa. The traditional logic here is that during times of economic unrest, investors tend to dump the greenback in favor of gold. Unlike…

  • The Dollar Smile Theory

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    misamaliraza94
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    Ever wonder why the U.S. dollar strengthens both in times of tough luck and when the economy is booming like a Taylor Swift single? Currencies tend to fall when their country’s domestic economic outlook worsens, but the U.S. dollar’s unique global role makes it special so when the U.S. economy isn’t doing great, the currency may still…

  • Bloomberg Dollar Spot Index

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    misamaliraza94
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    The Bloomberg Dollar Spot Index (BBDXY) tracks the performance of a basket of 10 global currencies against the U.S. dollar. Its composition is updated annually and represents a diverse set of currencies that are important from a global trade and liquidity perspective. Since other dollar indices (ahem…DXY) do not update their composition and are comprised of only…

  • Trade Weighted Dollar Index

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    misamaliraza94
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    There is also another kind of U.S. dollar index. It was created by the Federal Reserve and is now used widely by lots of sexy people, like economists and currency analysts. It is called the “Trade Weighted U.S. Dollar Index“. You can find it on the Federal Reserve Economic Data (FRED) website here. Their website is probably one…

  • How to Use the USDX for Forex Trading

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    misamaliraza94
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    I bet you’re wondering, “How do I use this USDX in my trading arsenal?” Well, hold your trigger finger and you’ll soon find out! We all know that most of the widely traded currency pairs include the U.S. dollar. If you don’t know, some that include the U.S. dollar are EUR/USD, GBP/USD, USD/CHF, USD/JPY, and USD/CAD. What does this mean? If…

  • How to Read the US Dollar Index

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    misamaliraza94
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    Just like any currency pair, the US Dollar Index (USDX) even has its own chart. Holler at the U.S. Dollar Index: First, notice that the index is calculated 24 hours a day, five days a week. Also, the US Dollar Index (USDX) measures the dollar’s general value relative to a base of 100.000. Huh?!? Okay. For example,…

  • What is the US Dollar Index (USDX)?

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    If you’ve traded stocks, you’re probably familiar with all the indices available such as the Dow Jones Industrial Average (DJIA), NASDAQ Composite Index, Russell 2000, S&P 500, Wilshire 5000, and the Nimbus 2001. Oh wait, that last one is actually Harry Potter’s broomstick. Well if U.S. stocks have an index, the U.S. dollar can’t be…

  • Summary: Carry Trade

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    misamaliraza94
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    A carry trade is when you borrow one financial instrument (like USD currency) and use that to buy another financial instrument (like JPY currency). While you are paying the low interest rate on the financial instrument you borrowed/sold, you are collecting higher interest on the financial instrument you purchased. Your profit is the money you collect from…

  • Carry Trade Criteria and Risk

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    misamaliraza94
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    Let’s go over the criteria for a carry trade. It’s pretty simple to find a suitable pair to do a carry trade. Look for two things: Find a high interest differential. Find a pair that has been stable or in an uptrend in favor of the higher-yielding currency. This gives you the ability to stay…