A happy currency?
federico parra / Agence France-Presse / Getty Images
HSBC analysts tested the so-called "dollar smile theory" for this year's manic movement in the markets. What HSBC found was that the dollar rose both on days when the S&P 500 fell sharply and on days when it jumped large.
"What we find is that the dollar smile is not just a theoretical concept, it actually works in practice," say analysts Daragh Maher and Dominic Bunning.
Measured with the DXY
Dollar index, analysts said the dollar rose on days when the S&P 500 rose 51%
fell by more than 0.5%. The dollar rose 57% on days when the S&P 500 fell more than 1.5%.
The dollar is also sensitive to major S&P 500 rallies. The dollar rose 59% of the time the S&P 500 rose at least 2%.