The Dollar tail wagging the market dog

Mid-week market update: Here at Humble Student of the Markets, we believe that investors can gain great insight through the use of inter-market, or cross asset market, analysis. During this period of heightened trade tensions and emerging market stress, it is the US Dollar that is driving risk appetite, and the direction of stock prices.

Indeed, the stock market has weakened whenever the year/year increase in the USD Index has reached 5% or more. If the index were to rally up to about the 96 area this week from Wednesday`s closing level of 95.06, the 5% tripwire will be triggered.

Here are the bull and bear cases.

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