In this spirit I will look at CAD, a currency which always makes me think of gold (rather than tar sands). CAD is not really a conduit, it does not interface with the chaotic dynamics of the US stock market (because it is actively shielded from it). This is reasonably clear from a cursory examination of its 1 month chart.
I suggest the stock market plunges chaos into EUR/USD, USD/JPY and hence into forex in general. But the forex market purges itself of this, if I can put it this way as it is not a deterministic system. It seems this way and there is evidence to back this up. It is a powerful computational system, but why would it not be, the reliance on computer programs there is much more intense than in the stock market.
For now I will say about CAD, it is a good example of predictive problems in forex. I remember well the predictions in 2007 at parity with USD and again recently (the certainty it would continue or at least stay above parity). The problem with parity is it is a hugely important political number - CAD above hurts important sectors.
Remember the comments and one might assume actions of governments at EUR/USD 1.5 recently. The same kind of complex maneuvering happens at parity. That said another move down to it would more or less complete the three tests on 1 month. It will be interesting to see what happens.
But then where does the determinism in the stock market come from ? Perhaps because it uses the minds of individual traders and investors in particular. What I mean by this is the stock market is more an output of the advanced and not very well understood technology of the human mind rather than the complex but well understood technology of digital computers.
Leveraged trading in forex leaves little room for long term investment decisions or much thinking in the way the brain does this (again part of the difficulty of forex).
Obviously I am suggesting the US stock market and Canadian stock market are different, but it seems the US stock market may gets its determinism partly from sheer size (the complexity).
CAD may not be a conduit but it may have some deterministic structure within it and there is a complex relationship with the vast US economy (the recent boost in Canada was from Ontario and Quebec which have strong links with the US economy, in different ways).
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