A correction in equity markets is likely to have a disproportionate impact on the USD – NBF
|After rallying in the aftermath of the US debt deal in May, the greenback’s strength has proven elusive. Economists at the National Bank of Canada analyze USD outlook.
Unusually strong correlation with stock market
The recent bout of weakness has coincided with a risk-on sentiment in financial markets, led by a broad-based rally in global equity markets.
The 30-day negative correlation between daily changes in the S&P 500 and the USD broad Dollar index is nearly double its average since 2006. Under these circumstances, we believe that a correction in equity markets is likely to have a disproportionate impact on the USD.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.