Wednesday January 25, 2017 - 17:34:23 GMT
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Why the US Dollar and US Stocks Are Diverging
The following is a post from a highly respected member of the Global-View.com Forex Forum explaining the current divergence between the US dollar and US equities:
There is divergence between stocks and usd since 2017, which doesn't mean anything in itself, it seems usd mkt is more concerned about Trump protectionism while stocks looking at its jar ashalf full.
We got divergence begin of last year where stocks tanked while the us dollar stayed firm. This dissipated on the arrival of February and by March both were again around a point down ytd.
Given where stocks started the year a further extension is possible before retracement to the downside to 2200 or more on s&p, Yhe caveat here is it could be a break out year, for which you could argue Trump following thru on promises would provide that basis.
So it is a question of whether you believe in the buil, rebuild and reflate argument, in which case usd longs are looking vey cheap and are probably the safe hedge as well as a play on Trump.
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