We tend to forget that every trade is a pairs trade. It's just that we tend to keep the denominator constant, in local currency. The fact remains, however, that an asset class can rise either because it is strong against all currencies, because the local currency is weak, or both. Lately, commodities have been hitting new highs (top chart; DBC) as the bullish U.S. dollar index ETF (UUP; bottom chart) has been hitting new lows. Reflation seems to be the theme of the moment; I am closely tracking its impact upon interest rates and stocks.
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