The US Dollar Index is building bullish “Trade” momentum in my models, and needs to follow through here with fundamentally based Bernanke backing.
On July 14th, both the S&P 500 and US Dollar were in dire straits, testing new lows for the year respectively. Since, the US Dollar has rallied +2.8% to 73.82 today, and now it’s making a new 6 week high versus the inflated Euro, which has come in sharply in the past few weeks to 1.55.
Hawkishness will beget further bullishness in this “Trade”. It may depress some Wall Street bankers, but it will impress my savings account. The US Dollar has had as high a positive correlation to the S&P 500 as any macro economic indicator on my screens as of late.
Raise rates, strengthen the US Dollar, and break inflation’s back, Ben.
- US Dollar Index Chart, Building The Love
chart courtesy of stockcharts.com