The prosperity of a certain Capital Market means a higher purchasing power of its national currency. Thus, using their main Equity Index, we can predict the evolution of their currencies.
STOCK INDICATOR |
DESCRIPTION |
DOW Dow Jones Industrial Average |
|
S&P 500 Standard&Poor 500 |
it reflects the evolution of the top-500 American companies |
NASDAQ National Association of Securities Dealers Automated Quotation |
it records the largest traded volumes, being carefully watched by investors. |
|
Nikkei 225 |
the Tokyo Stock Exchange's Indicator; representative for the entire Asian Market. |
Dax Deutscher Aktien Index |
the Frankfurt Stock Exchange's Indicator; representative for Euro Zone |
DJ EURO STOXX 50 |
European Stock Exchange's Indicator; monitors the evolution of 50 top-industry companies in 12 European countries. |
FTSE |
the London Stock Exchange's Indicator; has variations such as FTSE 100 and FTSE 250 depending on the number companies |
Hang Seng |
the Hong Kong Stock Exchange's Indicator; considers the daily price variations. |
Theoretically, when one of these indicators records high values, the currency of the financial centre in question should increase, and vice versa.
For example, if Nikkei increases USD/JPY will decrease, and if Dow increases USD/JPY increases as well, or at least that's how things were happening before the 2008 financial crisis.