Chart of the week
US Dollar’s Effect on Non-US Equities.
After spending more than three months in a relatively narrow trading range, the US Dollar Index recently broke out of it.
A recent blog post highlighted the relationship between the dollar and diverging policies of central banks. Since that post, the dollar has moved higher.
Through most of 2017, the falling dollar provided a substantial tailwind to the already climbing global ex-US stock market. In the spring of 2018, a rising dollar poses a headwind to international equities that may also contribute to higher volatility.
Unless otherwise noted, data is sourced from Bloomberg.
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