As China continues to weaken and central banks hesitate to add more stimulus, commodity-linked currencies like the Aussie dollar will continue to underperform.
The final chart is of iShares MSCI Emerging Markets Index Fund (EEM) over Total World Stock Index ETF (VT), which measures the relative strength of emerging-market equities over a basket of world equities.
Similar to the story of the Aussie dollar, emerging markets have relied on stimulus and strong exports to developed economies.This year, the U.S. dollar strengthened versus other world currencies, which weighed on emerging markets. A stronger dollar makes U.S. equities more attractive and pushes money out of funds tied to emerging markets. Higher rates in the U.S. make it more difficult for emerging-market corporations and economies to borrow the funds they need to grow. It makes growth more expensive because they must borrow at higher rates over the Treasury yield. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.