CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Correlation between USDJPY and SP500

August 21, 2019 11:14 AM

Correlation between USDJPY and S&P500

Just from looking at a chart of the price action, one can see that the USD/JPY and the S&P 500 are strongly correlated.  As you can see from the 240-minute chart below, the 2 instruments generally move together:

Source: Tradingview, City Index

When stocks sell off, USD/JPY tends to sell off as well.  The reverse is also true:   As stocks go bid, USD/JPY tends to go bid as well.  The reason is that the Yen is considered to be an extremely safe asset. 

We have some important events occurring over the next few days, which may add some volatility to the 2 instruments:

Today:  July FOMC meeting minutes

Thursday: PMI manufacturing data

Friday:  Fed Chairman Powell speaks at Jackson Hole

If the S&P 500 takes out the Trendline resistance at 2933, there is room to move up to horizontal resistance near 2965. 

Source: Tradingview, City Index

If that happens, keep an eye on USD/JPY.  If the currency pair continues to move with the S&P 500, USD/JPY could take out the trendline at 106.42 and there will be room to run up to horizontal resistance near 107.25.

Source: Tradingview, City Index

If you are looking to trade USD/JPY, you may want to watch the S&P 500!


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024