Dollar’s Waning Influence Evident as Gold Breaks Up With EM Debt
- Correlation between dollar-denominated assets falls below zero
- Emerging-market bond rally is fueled by liquidity, growth bets
Photographer: Carla Gottgens/Bloomberg
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There is new evidence that the once-mighty dollar effect -- when markets traded everything in relation to the U.S. currency -- has faded.
The 120-day rolling correlation between gold and a Bloomberg Barclays gauge of emerging-market dollar bonds has fallen below zero for the first time since July 2016. That means the two assets have stopped responding in similar ways to the gyrations in the dollar.