Intra-day Dollar Drop Lifts Markets
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. When the dollar declines the major stock indexes and commodities will inflate and trade higher. That is exactly what has taken place this morning.
Please understand that the U.S. Dollar is the world's reserve currency. Therefore, all commodities are denominated in U.S. Dollars. You cannot buy a barrel of oil in Thai Baht or Japanese Yen. It must be purchased in U.S. Dollars. Therefore, when the dollar declines everything that we need to survive becomes more expensive. Food, energy, cotton, wheat, gold, silver, and almost everything else inflates when the dollar declines.