Zachary L Hill

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How do equity indices correlate with currency pairs?

Equity indices like S&P 500, Nikkei, or DAX often correlate with local currencies. For instance, strong Nikkei performance usually supports JPY outflows as investors diversify globally. Institutions model such flows for tactical positioning. Retail traders can monitor correlations: S&P 500 with USD/JPY, DAX with EUR/USD, Nikkei with JPY crosses. Benefits: anticipating flows tied to equity performance. Risks: correlation shifts in crises or policy interventions. Indices highlight that forex reflects capital allocation decisions across borders, not just speculative trades.