The U.S. Dollar Index (DX-U2) is one of the most important charts any trader can follow. As you probably know, the major stock and commodity indexes have traded inverse to the U.S. Dollar Index for the past 10 years. Since July 24, 2012, the U.S. Dollar Index futures have sold off from its $84.25 high print for 2012. Today, the Index futures are trading lower by 0.62 cents to $81.88 per contract. The falling dollar is once again helping to inflate the markets.
Inflation Watch
The U.S. Dollar is still the world's reserve currency. Most every commodity around the world is traded in U.S. Dollars. This tells us that if the U.S. Dollar is devalued by the central bankers then inflation will likely emerge. That type of action causes prices in food and energy to inflate and trade higher when the dollar becomes devalued.
Some leading equities that will generally trade higher when the U.S. Dollar Index declines include the CurrencyShares Euro Trust (NYSE ARCA: FXE), iPath Dow Jones UBS Copper Total Return Sub-Index ETN (NYSE ARCA: JJC), United States Gasoline Fund, LP (NYSE ARCA: UGA), ProShares Ultra Silver (ETF) (NYSE ARCA: AGQ) and the Deutsche Bank AG DB Gold Double Long ETN (NYSE ARCA: DGP).
Just remember, if the U.S. Dollar Index catches a bid higher, each of these equities will come under selling pressure. The U.S. Dollar Index futures (DX-U2) should have some near term chart support around the $81.62 and $81.00 levels.
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How Low Will The Dollar Go?
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Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
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