Dollar Rallies, Markets Hit

The inverse correlation between the dollar and the gold and equity markets has been strong this year. The dollar is trading down about 6% for the year while gold and equities are trading up roughly 15%. We highlighted the negative impacts of this dynamic in early August.

Yesterday's FOMC meeting fueled a large spike in the dollar against other currencies translating into weakness in gold and equity markets. The correlation continues to be strong. We believe this bounce in the dollar will be short-lived though and more downside is likely in the long-term. We still hold gold awaiting a breakout.