Equity Investors Should Be Paying Attention To What The Foreign Exchange Market Is Saying

The foreign exchange market has a dire warning for equity market: the low U.S. dollar is accompanied with heavy volatility.

From a historical point of view, a lower U.S. dollar is seen as a positive for multinational companies as they prepare their products to be sold in dollars and can then sell it in other currencies, Boris Schlossberg of BK Asset Management said during a recent CNBC "Trading Nation" segment. But as the dollar index is flirting with a multi-month low, it also comes at a time of "massive" spikes in volatility -- something which is "not really good news."

Stock investors should now be asking if this is a "precursor" to an increase in volatility in the equity market, Schlossberg continued. In fact, the foreign exchange market could be screaming out a message that "no one is anticipating right now."

Taking a somewhat different point of view, the lower dollar sends a signal that global economic growth is "very good," Chad Morganlander of Washington Crossing Advisors added to the conversation. In fact, economic growth may even be coming in ahead of expectations which also explains the rise in non-U.S. currencies.

Contrary to Schlossberg's beliefs, Morganlander believes that a weaker U.S. dollar will be a positive factor for corporate earnings and revenue.

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