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DXY vs S&P: they live together and decline togetherJust a small research I made. Haven´t applied any advanced methodics though, just a simple comparison. 1. DXY and S&P move together on bullish times which means there is a strong demand on US Dollar to make profit from raising american market. The profit is double: growth of the stocks index and a convertion back from the USD to your own currency which, by that time, should be substantially cheaper than the USD. 2. In times of bearish cycle for the USD, S&P also goes down or, at least, it doesn´t grow. It is surely explained by a moreless stable domestic demand but a huge reduction in foreign demand, that prefer parking money in Gold or Japanese Yen. 2.1. Defensive strategies are applied on stocks market in times of a decline. E.g. www.investopedia.com 3. In times of a switch between bullish and bearish cycle there was a period when the SP1 Index has already begun to decline but the USD still kept up and renewed peack values. Probably this time we will see a slightly different picture: USD sell-off will start before the stocks market decline as these who invested in stocks will start going back to their home currencies and cancel home loans on an unprecedent low interest rates. On another side, the USD "Safe heaven" period should almost match with the euphoria on the stocks market: we have already seen a 70 bln Dollars capital inbound once the new US President was elected and there should be more to come as money will move from Europe and, specially, from Asia. Therefore, the USD outflow would also start before a definitive decline on stocks indexes and complete a bearish movement after the market hits new long-time lows.
TVC:DXYEducation
by captain_smollett
3