'Eerie reminder' of 1987
The dollar's resiliency so far in the face of recent events is an "eerie reminder" of the greenback's reaction to the 1987 crash, said Simon Derrick, currency strategist at Bank of New York Mellon, adding that the wisest move may be to move to the sidelines to see how events unfold.
He recalled that the dollar had managed to rally following the Black Monday stock market crash of 1987, gaining more than 2% on the next day and finding further support until the following Friday, when equities stabilized.
At that point, the dollar began to collapse, helped on its way by a Fed rate cut, Derrick said in a research note.
"However, if the events of 21 years ago are any guide then the ultimate outcome of what has just happened would be dollar bearish," Derrick wrote. "We watch and wait."
No comments:
Post a Comment