The February-March Risk ON landscape has partly been a function of oversold conditions from the January 2016 meltdown. However, the fall of the US dollar has signified as the primary driver for 'fast and furious' rebound (helped by the global central banks' recent Shanghai Accord).
Yet has the US dollar's hiatus (via short covering) ended?
The Bloomberg USD (BDXY) index
The original USD (DXY) Index
The Asian dollar (JP Morgan Bloomberg ADXY) Index
The rise in the USD translates to lower commodities in particular oil.
US WTIC
Europe's Brent
And higher US dollar will mean lower the overall commodity prices: the topping of the S&P GSCI commodity index?
And the correlation of oil with risk assets have only tightened which means if the correlations hold then lower oil equal lower stocks.
Moreover, since the rise of the USD implies tightening of systemic liquidity then it should also mean lower prices for risk assets
The FTSE World
The MSCI ACWI World iShares
And finally the PSEi's twin, Brazil's Bovespa
Has Risk OFF arrived?
Interesting
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