Stocks and USD inverse relationship

[Tomski]

Hi,

I been tracking some of the recent FX threads and have notice people talking about pressure on the USD when the US equity market is rallying. Could someone explain to me why this is. I understand the inverse relationship between commodities and the dollar, however to me it would seem plausable for the USD to show strenght when the US market rallys as people need dollars to purchase stocks.

Thanks,

Tom

 

[Pippy5000]

Tom,

It's an issue of Americans investing money outside of the US because they feel safer doing so and foreigners repatriating their money as the "coast seems clear" so to speak.. However, there are times when extreme stock purchasing can actually increase the value of the Dollar.. However, usually equity strength = USD weakness.

 

[normbeef]

I wouldnt be too hasty in trying to understand the so called correlations.... I would like to see the proof of this.. rather than "this usually happens when this happens etc etc"

anything can happen ???

 

[investcdn]

The equities markets seem to becoming unmoored from economic reality. How could the failure of either Chrysler or GM could be other than negative for the US dollar?

Stock Research Portal

 

[StockHunter]

It's dollar inflation, the only reason the dollar has held it's ground lately is because the market has been down, so people have been saving money instead of spending it. When the market goes up people get more comfortable and spend more which puts more dollars into circulation.

Thats my best guess .