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Evaluating Relative Equity Index and Currency Strength on Fundamentals

Evaluating Relative Equity Index and Currency Strength on Fundamentals

2014-09-23 00:33:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

• There are 3 fundamental fronts on which investors now gauge markets: growth, yield and monetary policy

• Given the position between the US, UK, Eurozone and Japan; a fundamental imbalance is building

• FX, on the other hand, may be more fairly balanced as the market pays closer attention to CBs and rates

Want to develop a more in-depth knowledge on the market and strategies? Check out the DailyFX Trading Guides we have produced on a range of topics.

Do the fundamentals support the S&P 500's outperformance relative to counterparts like the DAX, FTSE 100 and Nikkei 225? Do they back the USDollar's rally? With the grumbles of capital market's broadly overreaching their tangible values, we take a look at the relative strength of the equity indexes and currencies from the majors. To gauge their strength, we use three aspects that have solidified into critical measures of health over the months and years: growth, yields and monetary policy. On this scale, the S&P 500 perhaps should not be leading the charge. The Dollar and Pound compete for bulls' attention while the Euro is giving the Yen a run as the weakest player. We look at the 'big picture' fundamental scale in today's Strategy Video.

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