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Thread: FOREX Quiz

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    FOREX Quiz

    If you can't get at least 4 out of 5 these questions correct, you should NOT be investing in foreign currencies. Answers will be posted tomorrow.


    If the US stock market rallies the US dollar SHOULD?
    Strengthen
    Weaken
    Stock market has no affect on the US dollar

    If the US trade deficit widens due to Japanese sell off of US treasuries, the US dollar SHOULD?
    Strengthen
    Weaken
    Current account deficits do not affect a country's currency

    In a surprise decision, the FED raises interest rates by 50 bp. The US dollar SHOULD?
    Rally
    Weaken
    Interest rate decisions have no affect on a country's currency

    If oil prices surge to record highs, what affect will this have on the US dollar?
    Positive
    Negative
    Oil prices have no affect on the value of the US dollar

    An increase in unemployment numbers in the US will have what affect on the US dollar?
    Positive
    Negative
    Unemployment data has no affect on a country's currency

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    Banned Melonie's Avatar
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    Default Re: FOREX Quiz

    ^^^ some would argue that the answers that USED to be correct are no longer the case given recent global economic changes. For example, the relationship between the US dollar strength and US stock markets used to be forward and directly proportional - but is now arguably backwards and inversely proportional i.e. some 50% of US stocks are now owned by foreigners, and a significant portion of US stock exchange listed companies now earn the majority of their profits in foreign currencies instead of the US dollar.



    Similarly, on the relationship between oil prices and the US dollar, in the good ol' days a run-up in US dollar denominated oil prices used to caused the dollar to strengthen because foreign oil buyers were forced to exchange more of their Euros or Yen for dollars first in order to buy their oil. However, now that Iran is requiring direct purchases of oil in Euros or Yen the US dollar exchange gets bypassed.

    - but directly applies to Iran's recent announcements re pricing oil in Yen and Euros

    As real estate markets have clearly shown, recent globalization and global liquidity changes (or if you prefer, the slow death of dollar hegemony) have in turn caused lots of other downstream changes as well. Many of these changes are also re-writing the 'rule book' in regard to some of your posted points ... although not everyone yet realizes this !!!

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    Default Re: FOREX Quiz

    I can tell this is going to be good...

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    Default Re: FOREX Quiz

    Thats great... Now try to answer the questions as best you can. There is no judging here, just trying to get people to think. When you think is when you grow.

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    Default Re: FOREX Quiz

    I refuse to answer based on the stupidity of question 2.

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    Default Re: FOREX Quiz

    OK how about this ... all of the above have no effect on the value of the US dollar ... based on the fact that the US federal reserve note HAS no value !!!

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    Default Re: FOREX Quiz

    Comon Mel,

    Don't sell yourself short.. ooops, please pardon the unintended financial pun. I think you'd get all 5. The answers are as logical as they seem, these are not trick questions. PM me your guesses, I'll post the answers with some brief explanations tomorrow. At least you will play with me, some others (I wont name names) *cough* 242 *cough* just don't seem to welcome new people.

    Maybe I have e-cooties?

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    Default Re: FOREX Quiz

    I'll do these one at a time..

    If the US stock market rallies the US dollar SHOULD
    Answer: Strengthen

    A rallying stock market provides an ideal investment opportunity for individuals regardless of geographic location and as a result there is a strong correlation between a country's equity market and its currency.

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