Dollar Up, Commodities Down

Commodities have taken a big hit overnight as the US Dollar has strengthened. Crude oil, gold, and grains have all moved broadly and significantly lower. Google had blow-out earnings report, followed by Citigroup having a less-awful-than-expected earnings report, and Caterpillar announcing a strong earnings report, that have resulted in the stock index futures moving strongly higher.

This, in turn, has strengthened the US Dollar and created a broad sell-off in Dollar-based commodity prices. LIBOR and short-term interest rates have also risen significantly, continuing the selling of Treasuries in anticipation of the end of the Fed's easing cycle. This is not going to help the housing sector, as interest rates are continuing to rise in recent weeks, after reaching their lows exactly on month ago today!

What a difference a day makes! It was just last Friday that the horrible earnings report of GE caused a sell-off of stocks. Isn't it amazing how connected the financial instruments are around the world? And isn't it amazing how connected they are to the value of the US Dollar?