Stocks

Stocks are microeconomic securities, rising and falling in
response to individual corporate results and prospects, while
currencies are essentially macroeconomic securities, fluctuat-
ing in response to wider-ranging economic and political devel-
opments. As such, there is little intuitive reason that stock
markets should be related to currencies. Long-term correla-
tion studies bear this out, with correlation coefficients of
essentially zero between the major USD pairs and U.S. equity
markets over the last five years.
The two markets occasionally intersect, though this is usually
only at the extremes and for very short periods. For example,
when equity market volatility reaches extraordinary levels
(say, the Standard & Poor’s loses 2+ percent in a day), the USD
may experience more pressure than it otherwise would — but
there’s no guarantee of that. The U.S. stock market may have
dropped on an unexpected hike in U.S. interest rates, while
the USD may rally on the surprise move.