Why Does The Stock Market Go Down When The Dollar Goes Up?

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   ngurecoposted 14 years ago

   Why Does The Stock Market Go Down When The Dollar Goes Up?

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   petitelettersposted 14 years ago

   I don't think the market goes down all the time when the dollar goes up. But one of the reasons that I can think of is that when the dollar goes up, that increases the cost of foreign countries investment in the U.S. because the currency exchange rate just went against their favor.

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   HoopBotposted 14 years ago

   That would be true if nothing else changes. But it's not true in real life because things do change, a lot.
   
   But basically, if the dollar goes up things cost less - like shares.

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   dabeanerposted 14 years ago

   Because neither has long had any relationship to reality.  The "dollar" is fiat money (funny money).  Most stocks no longer reflect valid prospects for growth and income.
   
   Your statement is not always true.  Often the market goes up when the dollar goes up.  It can also go down when the dollar goes down.  It can also go up when the dollar goes down.
   
   It's a big game, and an exercise in mass psychology and nimbleness.
   
   http://hubpages.com/hub/stock-market-fo … quirements

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   traderxposted 14 years ago

   There is no linear relationship between the dollar and the markets.  Right now (recently) they care, but a year ago they cared about something else.
   
   The traders are always looking for something to focus on, be it oil, interest rates, earnings etc.  Its a never ending roller coaster of what matters most.  Just when you think you have it down, it is already shifting to something else.
   
   Play it for what it is short term, but realize that relationships (correlations) come and go like the wind.

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