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Forex pairs in this Article » EUR/USD
FXstreet.com (Bali) - The breakdown of the relationship between the euro and the S&P 500 should raise a yellow flag for Europeans investing in the US, notes Marc Chandler, Head of FX at BBH.

Key Quotes

"Last September around the dramatic reaction to the Fed's decision not to taper was the first time that the correlation became inverse since the collapse of Lehman. It had been trending lower recently and is now negative or inversely correlated again. The -0.013 correlation currently is likely to fall further. The 30-day correlation is at -0.33."

"The 30-day correlation has been negative since before Christmas. The correlation was also inverse for around a month from mid-August. Before that, you have go back to before Lehman's demise to see a 30-day inverse correlation between the returns of the euro and S&P."

"For some investors it is warning that the investment climate may be changing. Many longer term bullish dollar views are predicated on precisely this break down of the risk-on/risk off matrix. A rising stock market, predicated on solid US fundamentals, could coincide with a dollar rally, though not today."
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