The U.S. Dollar Index is rallying higher ahead of the market opening. The U.S. Dollar Index is trading higher by 0.44 cents to $77.60. When the U.S. Dollar Index rallies higher this will generally put pressure on the major stock indexes around the world. The rising U.S. Dollar Index will also put pressure on the CurrencyShares Euro Trust(NYSE:FXE). This morning as the European markets are all declining. The S&P 500 e-mini futures are trading lower by 1.50 points to 1298.50 before the opening bell. Should the U.S. Dollar Index decline after the opening bell it would prudent to watch for a stock market bounce. Remember the U.S. Dollar Index and the major stock market indexes will often trade inverse to each other.
This afternoon , the Federal Reserve Bank Chairman Ben Bernanke, will be taking questions from the press. This new format by the central bank is likely due to the pressure from Congressman Ron Paul and his mandate to audit the Federal Reserve Bank. Many investors are blaming the Federal Reserve for the recent spike in inflation around the world. High inflation has recently sparked food riots in Tunisia, and Algeria. The central bank currently has the benchmark fed funds rate at zero percent since December 2008. The central bank has also pledged to buy $600 billion in U.S. Treasuries dubbed QE-3. There is even chatter that the central bank will expand it U.S. Treasury purchasing program further past its June 2011 completion. Quantitative Easing 3 could be on its way as hinted from the other Fed presidents.
This morning it would be wise to expect some commodities to be under pressure. Stocks such as Cliffs Natural Resources Inc(NYSE:CLF), Southern Copper Corp.(NYSE:SCCO), could be directly effected by the rising U.S. Dollar Index. Traders should look for all commodity stocks to trade higher should the U.S. Dollar Index decline.
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