By Nicholas Santiago on June 18th, 2010 10:01am Eastern Time
This morning the markets have opened slightly higher as the U.S. Dollar Index is trading flat on the session. The U.S. Dollar Index is unchanged at $85.68. When the dollar is flat the market will usually hold steady or even catch a small bid. It is when the dollar rallies that the markets deflate and pullback. The U.S. Dollar index topped out on June 7th, 2010 at $88.70. It has since pulled back sharply and is now trading at $85.69. Obviously you can see the rally that has occurred in the stock market indexes since that time. The stock market will usually trade inverse to the dollar. The only time the dollar does not effect the stock indexes is when the volume is extremely light.
This morning most leading commodity stocks that will trade inverse to the dollar are flat today. Stocks such as Cliffs Natural Resources (NYSE:CLF), and United States Steel Corp (NYSE:X), are both trading basically flat. Until the dollar makes a move the stocks will likely remain this way. Remember when the dollar declines commodities and inflationary stocks will inflate and vice versa should the dollar rally these stocks will deflate. Remember the dollar is still one of the most important charts for traders and investors at this time.
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