The first thing to understand in the currency circle is the logic of the market
The logic of the market is very simple: large funds buy, prices rise; large funds sell, prices fall.
To make a profit through investment in this market, you must first look at the macro economy.
Interest rate cuts are commonly known as "water release". So why does the US dollar interest rate cut lead to an increase in the price of this market? Let's analyze it from several aspects
1. The seesaw effect of commodity and stock prices: when one end rises, the other will fall.
2. The consequences of the US dollar interest rate cut: commodity prices in water release countries rise. Funds flow into developing countries. Stock markets in water release countries fall. This is contrary to the analysis of many "big Vs" because they don't actually understand economic principles.
3. The impact of the US dollar interest rate hike: interest rate hikes will cause crises in economies related to the US dollar, unstable exchange rates in these countries, appreciation of the US dollar, and global funds will flow into the United States. The United States distributes these funds to Wall Street giants through treasury bonds, and they then invest in US stocks. The situation is the opposite when interest rates are cut.
4. The biggest risk of the US dollar interest rate cut: funds may flow out of the United States.
5. The way the United States copes with risks: reducing financial risks by exporting military force. Every time the United States cuts interest rates, it often takes military action internationally, as was the case in the past five Middle East wars.
