How does Dow down make dollar go up?

Ok, a newbie here for sure. Why should the dollar be going UP when the dow is going DOWN? GPB/USD and EUR /USD were sizzling upwards early this a.m. Then all this news is out about the dow going down. I would think that would make the dollar go DOWN not UP against the EUR and GPB. I've also been led to believe that there is no statistical proof that the forex trades in tandem with other markets. If so, then again, why is EUR/USD and GPB/USD goin down 'in tandem' with the dow? Any answers? Are u sure this isn't all a roll of the dice game?
Thank you

the main theme is :carry-trade positions unwinding, money flowing to heaven-safe currency: USD.

Actually, the US stock market has been artificially inflated for the past couple of years by a weak dollar. Since US stocks are denominated in the USD, they're generally cheaper on the international market, and mutual funds, investment companies, etc. in Europe and Asia see them as a good deal, so they buy them up.

Think about it: when the EUR was introduced, it was worth about 60% as it is now against the USD, and the Dow was around 7,000... now it's around 14,000. If we assume that the Dow is an accurate measurement of the stock market in dollars*, then essentially it didn't go very far in almost a decade.

Likewise, when the dollar gets strong, the foreign investors see this as a good opportunity to take a profit by selling all their holdings, which causes the stock market to fall. If and when the USD does make a long-term comeback against other currencies, the US stock market is going to crash, and crash hard.


* Personally, I think the S&P 500 is a better measure of the US stock market... the Dow was about the only measurement of the market before the 1950's, but it is now very obsolete.

good explained blue, but i want to add that rates is important and some people use the strategy to buy stocks when rates are high so it is def a quest about if US rates are high now, so again risk aversion comes into play but looking at say dowindex i still se upside momentum


revoke

When stocks start to go down, foreign investors and speculators buyback the dollar for the dollar-denominated assets, id est, the dollar's safe-haven appeal comes into play.
Also, threasuries-the goverments' safe save-go up when market gets risky.
See how Gold as a hip and thigh commodity goes against dollar's movement direction.
When market tumbles, risk aversion comes into focus and carry-trade unwinding becomes due and people buy what they had once sold to buy the stocks.That is, when market is healthy, I fund my pocket by borrowing Yen (with 0.5 percent interest rate) to buy dollar to buy the stocks and when risk shakes up, it all goes the other way around.

I would agree that a consistently stronger dollar might cause a correction in the markets, but they will not tumble overnight because of it, just as the dollar will not gain strength instantenously. Furthermore (and this is not to throw in any conspiracy theories), one implicit objective of the Fed is to protect large U.S. equity holders from losing their money, so in its usual manner, when this correction does happen, it will adjust the interest rates to stop the bottom from falling out of the stock market. Which will, in turn, lead to a weakening of the dollar against other currencies, completing the cycle.

take my advice. Market could react theway it wants to news, and analysts always have a reason why it did so.

Good comments about the Fed. and markets' reaction to the news.
That is exactly what it is for real.
Yes, that is why analyst's analysis comes after an event takes place !
Feel the market, manage your risk, take your profit and stop your loss !
Technically analysisng, analyse the fundamentals and keep up with the main theme.That is carrytrading !

The early bird catchs the worm !

And the smart fish dont get hooked rofl!


revoke

I'd think it would be the opposite. All these years the dollar has been weakening, I've made a killing on emerging markets, Canada, SE Asia, China, Europe, even Latin America. As the dollar weakens, these go up that much faster so you double dip - good appreciation + growing currency differential.

For them to invest in ours during those years would be a double hit.

Maybe now they want to do the same as the dollar strengthens against their currencies. Yes, they have to buy dollars to invest in our stocks. If they think their currency has peaked against the dollar, now is the time to do that.

market has been going up and DOW making new record highs and at the same time Dollar was making new record lows

The DOW is bound to going up in value when USD is going down as there would have to be more weak dollars for it to valuate the real price of it !
That's infaltion, isn't it ?
Likewise, when dollar is felt to have reached a good point, profit-taking takes over and makes the mass sell the stocks to buyback the dollar and push it further up from that turning point and trigger the market fall-out.
That means, everything comes from the greenback, otherwise, if it was the market running the performance, upgoing market index would result in stronger dollar as the demand for dollar-denominated assets would make the dollar go up while it practically goes down when market rallies,though, nothing is that sharp-cut.

Again, don't get all carreid away if you got the right impression from a piece of news and fundamental construing as it may not always be the case !

It is not very unfair to say markets are as unknown as human being itself and only when resolved, the problem becomes easy to talk about !
So, sometimes, you really need to be Technical !