I have a question about relationship between currency and equities.
I understand (kind of) that in general as yields (equities, bonds, whatever) in a country appreciate/depreciate then so will the currency as we would expect money to flow into higher yielding currencies.
I also have limited knowledge about about the relationship between equities and the carry trade (e.g. correlation between DJI and GBP/JPY) due to risk/risk aversion.
My question is:
Why is it that whenever the US stock market falls, is there a simultaneous increase in the value of the US currency vs other currencies (that are not major players in the carry trade, e.g. EUR)?
Responses Appreciated.
Vic
I understand (kind of) that in general as yields (equities, bonds, whatever) in a country appreciate/depreciate then so will the currency as we would expect money to flow into higher yielding currencies.
I also have limited knowledge about about the relationship between equities and the carry trade (e.g. correlation between DJI and GBP/JPY) due to risk/risk aversion.
My question is:
Why is it that whenever the US stock market falls, is there a simultaneous increase in the value of the US currency vs other currencies (that are not major players in the carry trade, e.g. EUR)?
Responses Appreciated.
Vic