A Rising Dollar Becomes A Headwind
Since early September, the dollar Index has risen nearly 4%, reaching its highest level in over a year. The continued rally over the last few days is strange, since October rate-hike odds collapsed from above 60% to roughly 25% on a weak payroll number and less-than-expected PCE price data. Softer policy expectations normally weaken a currency. Dollar strength has been a reliable headwind across asset classes. Over the past ten years of monthly returns, every major category has moved inversely to the dollar as the table below shows. Index Correlation with dollar Avg month, dollar up Avg…
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