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The Euro Recoupling With "Risk Assets" Again

 February 24, 2012 12:50 PM

The euro is once again trading with "risk assets". The chart below compares EUR-USD with the CRB Commodity Index. In Eurozone-related periods of stress, the euro decoupled from commodities to the down-side (red arrows), but returned back to track the commodity index. Since the beginning of this year, the two have been moving in tandem again.

UER-USD vs. the CRB Commodity Index (Bloomberg)

As the focus shifts from the Eurozone toward global economic risks that will impact commodity prices (many of those driven by the knock-on effects of the Eurozone recession), the euro will trade as just another "risk asset". For now.
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