With the US Dollar Index finishing down 4.1% last week I was curious to see what impact similar declines had on the index in the past. So I fired up Excel and downloaded some data, searched for weeks where the index had closed down 3% or more and got the following table –
What surprised me was that in the 23 years of data I downloaded there had only been six weeks where the index had fallen sufficiently to meet my cut-off of 3% or more. By contrast, the Dow in the same period had 98 weeks where the index closed down more than 3%.
To visualise this I marked the events on the chart below –
As you can see the impact of such weeks is somewhat mixed in no way does it seem to be a harbinger of impending doom – the falls of 2009 and 2020 did see a decent decline in the index but it was by no means catastrophic. The other events were somewhat weak in their effect.
As I am currently short the index my preference would be for a 2020 style follow through but I don’t get a vote so I will wait and see.