Over the past several weeks, we have monitored the US Dollar’s strengthening correlation with global stock performance as the greenback became a key destination for capital fleeing risky assets (stocks, commodities, high-yield currencies). Looking at the latest data, we see that the correlation between EURUSD and the MSCI index of world stock performance stands at a hefty 94% having reached the highest point since it began to climb along with deepening market turmoil in mid-August.
EURUSD Spot vs. MSCI World Stock Index Source: Bloomberg