You’d think that the linkage between two important asset classes such as currencies and stock markets would be straightforward, but it’s not. For one thing, both markets respond to many economic factors the same way, which is not to say a move in one causes the same move in the other. But they don’t move in sync on every factor. A rise in inflation and inflation expectations that is serious enough to trigger talk of rate hikes is currency-favorable but stock market-negative.

A stock-market crisis exacerbates existing confusion.