The question "What does the dollar affect?" was addressed from macroeconomic and broad market points of view last month. In summary, the currency exchange rate in both the U.S. and in every other country or bloc with its own currency is the economy’s single most important price. If that price is "wrong " (no matter how you wish to define right or wrong when no single rate can solve all market relationships simultaneously) everything else in the economy will have to adjust.

A second conclusion is the relationship between currencies and other financial markets tends to be far weaker and much less stable than commonly believed.