Thanks to the Fed promising to keep interest rates at zero for some time, the US dollar has
already partially replaced Yen as #1 carry trade funding currency. As a result, the anticorrelation
that developed between stocks and the dollar is worth noting. The chart below illustrates
SP 500 index vs inverse US dollar index. While both could rally sharply on positive news like
better than expected jobs number, eventually the currency trade should prevail. Don’t be surprised
if stocks correct sharply early next week.
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