Goldman Sachs: Need to pay attention to the relationship between the US dollar and the volatility of the VIX index

Goldman Sachs stated that while the changing correlation between the US dollar and US stocks has garnered much attention this year, what is more noteworthy is the relationship between the dollar and the VIX index. Over the past five years, the dollar has typically had a positive correlation with the VIX index, with the safe-haven currency strengthening during periods of increased volatility in the US stock market. However, this situation changed earlier this year, and if volatility in the US stock market increases, the dollar is likely to decline accordingly.

Goldman Sachs noted that focusing solely on the relationship between foreign exchange and the S&P 500 index obscures the ongoing weakness of the dollar, which is more evident in the recent correlation between the dollar and the VIX index. When the dollar's attractiveness diminishes, this is more pronounced in its correlation with the VIX, although the recent few days' movements appear to be more "normal."