The Dollar

Posted by Ray on July 22, 2009 under Markets, The Federal Reserve | Be the First to Comment

As many of you know I have been pointing out the correlation between the weak dollar and higher equity prices. This has caught on and ZeroHedge has even made the connection between the two. Simply put, we are seeing the devaluation of the dollar which leads to higher equity prices and commodity prices, or inflation.

For full disclosure I am short the dollar against most major currencies, i.e. Euro, New Zealand Dollar, Canadian Dollar, and the Pound.

Here is the DXY, dollar index, versus the S&P 500 over the last year.

Here is the DXY on its own, pretty ugly:

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Tags: dollar decline, monetary policy, US dollar, US economy

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