Falling U.S. Dollar Inflates Markets
This afternoon, the Federal Reserve Bank announced that they will keep the fed funds rate at zero to a quarter percent until the end of 2014. This statement by the central bank has caused the U.S. Dollar Index to plummet intra-day. As we all know by now, when the dollar dips the markets flip. Everything in the market has rallied higher. Gold, silver, copper, oil, and just about every other commodity has soared since the announcement. The SPDR Gold Shares (NYSE:GLD) have jumped higher by $4.19 to $166.21 a share. Gold is the ultimate barometer of inflation and it will usually lead the stock market.
As long as the U.S. Dollar Index continues to decline these markets are likely to inflate. Should the U.S. Dollar Index eventually find a low and rebound that is when the stock and commodity markets will pullback and decline lower. Until that time the inflation rally is alive and well.