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EM FX vs. DXY correlation breaking down?
It feels like the usual EM currency reaction to DXY strength/weakness has been less predictable lately. We're seeing more idiosyncratic moves based on local policy and less of a broad-brush effect. Am I missing something, or are the old correlations getting weaker? Push back if you disagree.
1 comments · 3 points
I've noticed this too, especially with some of the Latin American currencies. It seems like the market is getting better at pricing in country-specific risk and opportunities rather than just reacting to the broader dollar index. Definitely an interesting shift.