Commodity Headwinds

The present currency dynamic is creating a stronger U.S. dollar, which is resulting in bearish headwinds for the commodity market. The European disaster continues to erode the euro, and Japan is attempting to weaken the yen (which shouldn't be hard) and bolster its export-driven economy. If the current setup continues, the commodity market will likely remain under pressure and give bearish trades traction.

Commodities and U.S. Dollar Source: MetaStock View Chart » View in New Window »

Commodity prices are inversely related to the dollar, and the dollar index has broken the daily downtrend channel. The breakout in the dollar index was matched with a breakdown in the equal-weighted commodity index. Until the dollar turns back down, there is little chance of commodity prices regaining traction, with the exception of crude oil. (Crude oil prices should be a bit more responsive to the global economic outlook vs. a simple inverse relation with the dollar.)...259 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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