Dollar Plunge Lifts Markets Early
Nicholas Santiago | Sep 20, 2012 01:03AM ET
Every stock market move is still all about the U.S. dollar. Once again, the U.S. Dollar Index futures (DX-Z2) are plunging lower after the opening bell rang at the New York Stock Exchange. This type of action in the U.S. Dollar has been common since the central bankers of the world have implemented more easy money policies.
Traders should note that the U.S. Dollar Index has declined lower by 6.0 percent since late July 2012. The U.S. Dollar Index is a measure of the value of the United States dollar relative to a basket of six major foreign currencies such as the euro, yen, and British pound. When the U.S. Dollar Index declines the major stock and commodity markets will inflate and trade higher.
One of the leading sectors that will usually rally higher on the back of a weaker U.S. dollar is the base and industrial metal stocks. Yesterday, leading stocks such as Freeport-McMoRan Copper & Gold Inc (NYSE:FCX), Teck Resources Ltd (USA) (NYSE:TCK), Vale SA (ADR) (NYSE:VALE), and Cliffs Natural Resources Inc (NYSE:CLF) are all trading higher on the session. Traders should remember, if the U.S. Dollar Index starts to trade higher these same stocks could reverse and trade lower. Traders that do not have a chart of the U.S. Dollar Index can follow the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP).
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