By Nicholas Santiago on February 11th, 2010 12:53pm Eastern Time
The word out of Europe today is that Greece will be taken care of. The Euro leaders basically said that they will be increasing the monitoring of Greece's finances. Who really knows what that means? They also stated that Greece has not requested direct aid. In any case the U.S. Dollar declined from the news as the Euro currency gained off it's lows. Once the dollar declined the U.S. markets all shot up higher. This caused the inflation trade to be back on for most commodities and inflationary stocks today.
Some commodity ETF's that are benefiting from the intra-day dollar pullback are the SPDR Gold Shares (NYSE:GLD) which are trading higher by nearly 2.00 points today. The IPath Dow Jones UBS Copper Subin (NYSE:JJC) is an ETF that tracks copper and is trading higher by nearly 2.00 points as well.
The U.S. Dollar can be played for long trades in the U.S. markets by using the Powershares DB US Dollar Index (NYSE:UUP). If one wants to short the dollar and play the possible downside the Powershares DB US Dollar Index (NYSE:UDN) can be used. The Currencyshares Euro Trust (NYSE:FXE) can be used for traders and investors that want to play the Euro long.
Since March 2009 the catalyst for a rising stock market has been the falling U.S. Dollar. Nothing has changed since then. Simply put every trade is a dollar trade. Therefore, when the dollar is higher the markets decline. When the dollar is lower the opposite effect occurs and the market rises. Keep an eye on the dollar regardless of what you happen to be trading.
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