Home > Lessons from the trading floor, Uncategorized > Equity markets getting direction from US$

Equity markets getting direction from US$

As equity traders, we normally don’t need to be extremely aware of the US $ and it’s relationship with other currency; however, for the last couple of weeks we have seen an increase in the correlation between the $ and the equity markets. A great part of this is the result of the strength and weight of the commodity stocks, which have always had a correlation with the currency markets.

This morning’s large move up in the markets was caused by the sudden weakness in the US$, when the US$ started to strengthen during the late morning, we saw the markets start coming off its highs. We also saw once again a sell divergence develop intra day today as only the Dow Jones made a 52week high.

As intraday traders you need to be aware of what factors/sectors/or markets are moving stocks, so you can be ready and anticipate the next move.

Now that we are done with the earning season, maybe the macro economic numbers will be the only indicators that move this equity market one way or another.

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