The Pain Trade
Why the pop in U.S. equities can't help the falling DXY.
Early price action to start the week in the FX space shows a breakdown in correlation with equities and broader risk sentiment.
Last week was a USD off / Equities off mood, with this week giving us a USD off / Equities on start. Even in the rates space, we’re seeing Treasury yields remain fairly muted.
Given the USD off / Equities off move, unhedged U.S. equity losses for European investors are now on par with the quarterly hit taken after Russia’s Ukraine invasion in 2022.
Today, we run through why a lower USD could be the pain trade going forward amidst an increasingly murky cross-asset correlation.