Hello dear traders. I would like to explain you shortly why the stocks are suffering if USD is strong, by giving you a close to reality example.
Let's suppose that an iPhone is for sale in Europe, at 1000EUR. If at the moment of sale, the quotation of EUR/USD is at 1.0430, this means that, if the APLE company needs convert 1000EUR to home country currency, or USD, they will receive 1043 USD.
Now, if the price of USD will increase against EUR, this means that the EUR/USD will go down, lets say to 1.0240. When the company will want to convert the 1000EUR back to USD, they will only get 1024USD, because now it is more expensive to buy USD.
So for every phone sold at the new quotation, the company will loose 43-24=19USD
The same for cryptocurrencies. Since the majority of coins are quoted against USD, like BITCOIN for example, this will also be affected if the dollar will be strong.
WHY?
Because bitcoin is bought all around the world, in different currencies, a the moment USD is more expensive against your how currency, then you need to pay more in order to buy the same amount of BTC.
So if a person has available for investing 10.000DKK, i will then get less USD to buy BTC, and the volume of buying will be affected.
This was just a simple example, so you can understand, but when you think that this happens at a global scale, than it makes more sense.
I hope this was useful, Good Luck!
Let's suppose that an iPhone is for sale in Europe, at 1000EUR. If at the moment of sale, the quotation of EUR/USD is at 1.0430, this means that, if the APLE company needs convert 1000EUR to home country currency, or USD, they will receive 1043 USD.
Now, if the price of USD will increase against EUR, this means that the EUR/USD will go down, lets say to 1.0240. When the company will want to convert the 1000EUR back to USD, they will only get 1024USD, because now it is more expensive to buy USD.
So for every phone sold at the new quotation, the company will loose 43-24=19USD
The same for cryptocurrencies. Since the majority of coins are quoted against USD, like BITCOIN for example, this will also be affected if the dollar will be strong.
WHY?
Because bitcoin is bought all around the world, in different currencies, a the moment USD is more expensive against your how currency, then you need to pay more in order to buy the same amount of BTC.
So if a person has available for investing 10.000DKK, i will then get less USD to buy BTC, and the volume of buying will be affected.
This was just a simple example, so you can understand, but when you think that this happens at a global scale, than it makes more sense.
I hope this was useful, Good Luck!
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.