Dollar-Euro Exchange Rate and U.S. Stocks
Posted in Economic Indicators
June 10, 2011
Whenever the dollar-euro exchange rate exhibits a trend, experts theorize. A falling dollar is good because U.S. exports boom and domestic employment rises. Or, a falling dollar is bad because capital flees the U.S., and import prices spur inflation. Are there reliable and exploitable relationships between the dollar-euro exchange rate and U.S. stocks? To check, we apply regressions and rankings to characterize the short-term and intermediate-term interactions between the exchange rate and the stock market. Using daily data for the dollar-euro exchange rate and the S&P 500 Index over the period January 2000 through May 2011 (about 572 weeks or 44 quarters), we find that: (more…)