Exchange Rate vs. Stock Market ?
Lately I’ve been following both the Mexican Peso vs. US Dollar exchange rate in addition to the US stock market. When the stock market had over 10000 points, the exchange rate was 1 USD=10.50 Pesos.
When the stock market plummeted to below 8000 points, the exchange rate was 1 USD=13.5 Pesos.
I believe a similar effect occurred with the Euro and other currencies around the world.
Why did the US dollar get ‘stronger’ against the peso when the US market plummeted?
Does the US dollar get ‘stronger’ against other currencies when the market falls? If so, then which is a better indicator of the US economy: the strength of the currency or the # of points of the market?
I took AP econ in high school and college, and I can deal with economic jargon so I’m hoping for complex answers 
The general feeling is that the dollar gets stronger when the _world_ economy is in trouble because the U.S. is still the strongest, most stable, single economy in the world.
http://www.nytimes.com/2008/10/06/business/06dollar.html
If you are looking for a metric that compares the U.S. economy with that of the rest of the world, then the relative strength of the dollar may not be too bad. But if you are comparing today’s U.S. economy with that of two years ago, the strength of the dollar is clearly the wrong metric to use. (That would show that the U.S. economy is better than it was, when the reality says that the U.S. is worse off, but that other economies are worse off still.) The stock market indices are better, but that doesn’t mean they are particularly good either.
If I had to choose one figure, I’d use the unemployment rate: too low and we are clearly in trouble; too high and we are having a great party but it isn’t sustainable; etc.
But let’s face it, who in his/her right mind would want to use a single number, any single number, when the issues are important and more data is readily available?
