A trader wrote to me about the change in the relationship between the U.S. dollar and the U.S. stock market yesterday, as we saw dollar strength (vs. the euro; bottom chart), but very strong stocks. A quick look at the Aussie dollar, however, shows that the U.S. dollar traded weaker on the day (top chart). Indeed, what we were seeing was more euro weakness than strength in USD.
Until recently, the USD has been trending lower against the major currencies; lately, though, we've seen more differentiated performance. I'll be watching to see if this represents the start of firming in USD. Meanwhile, it pays to watch a variety of crosses and not judge dollar strength or weakness on any one.
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