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### POV: MACRO CORRELATIONS SIGNAL FURTHER...>

DOLLAR
DOLLAR: ### POV: MACRO CORRELATIONS SIGNAL FURTHER WOES FOR THE DOLLAR
-The correlation between the daily US 10yr yield and the USD index has dropped
to its most negative in decades, touching -0.904 which, while coming close,
hasn't been surpassed since the late 1970's. So, despite US 10y yields rising
near 40bps this year, the USD index has dropped close to 3.5%, meaning the
currency's completely ignoring the Fed's policy plans as translated by the
Treasury market.
-Similarly, the correlation between the daily USD-index and S&P500 has turned
the most negative since late October (-0.77 vs. +0.14 at the beginning of the
year). As such, any recovery in equities (as we've seen so far today) from the
circa 8% pullback could result in the USD index re-testing YTD lows of 88.253.
-EUR/USD remains the largest component of the USD index (58%), and the most
profitable strategy in EUR/USD year-to-date, the K-band strategy, is still
signalling a long position, backed up by dollar CFTC positioning, which dipped
back into net short territory for the 9th time (out of 12) this year.

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