Interest rates are (at some point) going to go up - on the basis that they can't really go down
Economics 101 says that when rates go up stock markets go down, but when rates go up so does the currency.
If you are buying US stocks with foreign money which of these effects dominates?
Is there a historical or theoretical rule which states if rates go up by X% the market drops by Y%, and the USD rises by Z% ?
1) I think you are assuming too much; Yalen's been pretty clear that she wants to start raising rates sooner rather than later, and as such my feeling is that the market has already 'priced in' an increase in rates. Plus, there's the question of where else that money would flow to if interest rates were raised by a small amount. Foreign equities look rocky and if hte increase is a quarter or half percent I don't think that will be compelling enough for a mass exodus of cash from the stock market to the bond market.
2) 'foreign money' is going to depend entirely on which foreign money you are talking about. greece ≠ japan ≠ austrailia ≠ etc.
even so, while there's a negative correlation between rate hikes and market price, it's not very strong and fairly temporary (lasting days to months).
The correlation between USD and some foreign currency is a comparison between the strentghs of those two individual currencies.