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

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.