LIQUIDITY IN ABUNDANCE WITH CROSS-ASSET CORRELATIONS ELEVATED
As liquidity stemming from monetary and fiscal policy remains rife, cross-asset correlations are elevated, most notably this has been evidenced by the continued strong relationship between equity and FX markets. As market volatility drifts lower, high beta currencies have taken its cue from the pick-up in equities, which has largely come to the detriment of the US Dollar. As we highlighted yesterday, the negative relationship between the US Dollar and stocks is its strongest in several years. Put simply, the longer equity markets edge higher, the longer the downtrend in the greenback.