U.S. Dollar Index Stops Markets In Its Tracks. Will It Fade?
This morning the U.S. Dollar Index is trading higher by 0.27 cents to $74.95. Since June 7, 2010 the U.S. Dollar Index(DXY) has declined by 16.0 percent. The falling dollar has been the catalyst for the inflate stock and commodities markets. Could the stock market indexes actually climb with a stronger dollar? That scenario is highly unlikely at this time.
This morning was another day when the U.S. Dollar Index declined sharply lower after the opening bell rang at the New York Stock Exchange. When the dollar dips the major stock indexes flip (higher). This phenomenon occurs almost on a daily basis. The same exact thing happened yesterday. Therefore, all short term scalp traders should really watch and follow the U.S.
If there is one thing that trader's have learned since March 2009 it is that the markets will move higher when the U.S. Dollar Index moves lower. This morning the U.S. Dollar Index was trading higher by 0.20 cents before the opening bell. However, once the opening bell rang at the New York Stock Exchange the U.S. Dollar Index declined sharply lower.
GBP USD under Pressure Following Weekly Reversal Top
The GBP USD jumped overnight on renewed talk of an interest rate hike by the Bank of England. Traders reacted positively to the news that the Office for National Statistics reported a rise in consumer inflation more than double the Bank of England’s 2% target. The actual report showed that inflation rose at a 4.4% annual pace in February, up from 4% in January.
The Japanese Yen weakened for a second session against all of the major currencies in a move that many traders suspect is renewed selling pressure from the Group of Seven nations. Following a downward spike on Thursday to 76.37, the G-7 was asked to intervene in an effort to curb the Yen’s appreciation and help support the devastated Japanese economy.
Coordinated Intervention Sends USD JPY Sharply Higher
After a break to nearly 76.00 on Thursday, the USD JPY rallied overnight after the Group of Seven nations agreed to take steps to curb the Japanese currency’s rapid rise. The wave of coordinated intervention by the global financial powerhouse also known as the G-7 is an attempt to stabilize the Yen and bring it back to more respectable levels following the post-earthquake rally.
The U.S. Dollar Index is now approaching its November 4, 2010 low at $75.63. The U.S. Dollar Index has now declined by nearly 15.0 percent since June 2010. How low can the U.S. Dollar Index actually go? Many economists say that this decline is good for the stock market because the stock market indexes will simply inflate higher.