no significant correlation historically between dollar strength or weakness and market returns
no significant correlation historically between dollar strength or weakness and market returns
The chart below looks at the nominal U.S. dollar index (blue line, left axis) and the performance of the S&P 500 (red line) over the last 10 years. As investors can see, stocks have performed very well during periods when the dollar was weakening, and stocks have also rallied when the dollar strengthened substantially (2024 being a prime example). Put simply, the fact that there is no significant correlation historically between dollar strength or weakness and market returns tells us we should be focused on other fundamentals when making investment decisions.The U.S. Dollar vs. Foreign Currencies (blue line, left axis) and S&P 500 (red line, right axis)Source: Federal Reserve Bank of St. Louis[sup] 4[/sup]