Although there is no historical relationship between the dollar and the direction of stocks, these two assets have recently been moving in opposite directions. So what gives?
It’s likely that concern regarding economic growth is driving this relationship. As long as commodity prices rise, the dollar likely falls, as the so-called “commodity” currencies (the Aussie and Canadian dollars, emerging markets) will benefit as raw material prices increase. As global demand grows, the economic outlook gets sunnier and stocks tend to rise.