Here's How The USD Impacts The S&P 500

 | Mar 12, 2015 04:06PM ET

Attention

is

gravitating

to

the

dollar,

and

for

good

reason.

In

the

past

year,

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the

Dollar

Index

is

up

25%.

Since

1980,

the

dollar

has

only

risen

that

quickly

in

one

year

once

before:

the

period

leading

to

February

1985.

That

turned

out

to

be

the

dollar's

high,

unsurpassed

since.

Of

course,

the

system

is

dynamic.

Sustained

softness

in

the

US

and

strengthening

in

Europe

should

stem,

or

reverse,

the

rise

in

the

dollar

and

fall

in

the

euro.

In

summary,

whether

the

trend

in

the

dollar

is

positive

or

negative

for

US

equities

depends,

at

least

in

part,

on

how

improvements

in

Europe

are

weighed

against

some

softening

in

the

US.

Again,

the

historical

picture

is

mixed

and

offers

no

consistent

evidence

one

way

or

the

other.

More

importantly,

the

S&P

500

is

driven

by

more

that

just

changes

in

the

currency.

Sentiment

and

valuations

are

probably

of

greater

importance.

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