The last few days seem to confirm that the markets are not trading so religiously in an inverse manner to the US Dollar. What does this mean for trading this week? First of all, just because both the dollar and the markets were in positive territory on Thursday and Friday, does not necessarily confirm that the relationship has been decoupled. We could see the markets play catch up and move back down to stabilize that prior relationship. All we know now, is that we can't rely that the markets will go down if the dollar goes up. We must also be prepared to react to potential volatility as the trading community adjusts and reacts to this decoupling. I suspect that nothing significant will happen in remaining weeks of 2009, but I have a feeling that the new year could get very interesting. I will definitely keep an eye on this and post additional thoughts in the weeks to come.
One inverse relationship that has continued and should continue, is the price of Gold and the US dollar. As you can see, Gold has dropped off significantly in concert with the rebound in the dollar.
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Dollar Futures are currently trading down... If this continues into the morning, let's see if the markets gap up as a result
ReplyDeleteI'd like to make a note in relation to my comment that Gold and the US Dollar should continue to trade in an inverse relationship. In the last two days, Gold and the US dollar have both moved up...
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