FX Trading – Hodgepodge.

Unemployment Rate and Dollar Cycles

In the chart below, we have overlaid the dollar bull and bear cycles on top of the
unemployment rate. And given the last two cycles in the dollar i.e. bull from August
1991 to July 2001 and bear cycle from July 2001 to March 2008 (assuming it bottomed
there; yes a big assumption we make I know), it doesn’t seem there is much correlation
with the unemployment rate. But what this chart does seem to show (granted a small
sample size) is that a bear or a bull market can begin in the face of rising unemployment.
So, let’s say the unemployment rate is another one of those unreliable indicators on
which to trade the dollar—at least longer term.