Everything seems to be following the lead of the US Dollar today. Note the gap higher on the tick chart (right side) for the Dollar Index futures. The daily chart is on the left. How long has it been seen we have seen genuine Dollar strength? I had noticed last night that the Euro was plunging, even during evening hours in the United States, when the Europeans were asleep. I had no idea what the cause was.The Dollar is showing even greater strength today, more than I have seen in many months. As a result, many commodities are plunging, including grains, crude oil, and metals, and many currencies are also weaker against the greenback. Even the currencies that were trending higher, and that I highlighted over the past few days, are giving up some ground today against the Dollar. Treasuries are selling off today, as higher interest rates are often contemporary with a stronger Dollar. Welcome back, greenback!
From Bruce Knorr's commentary this morning on farmfutures.com:
The dollar continues to rally this morning ahead of the latest policy statement from the Federal Reserve on interest rates... The Fed is expected to hold rates steady, with traders watching for shifts in the central bank’s focus on inflation that could signal higher rates ahead.
With commodity prices having plunged so much in the past several weeks, this could give the Fed more than ample cover to surprise the market with a somewhat dovish statement this afternoon. It should be exciting, regardless of what the Fed does.
