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With hedge fund manager, CNBC regular and long-time veteran of the Russian markets Tim Seymour at the helm, Emerging Money (http://www.emergingmoney.com) provides education, trading analysis and comprehensive views of emerging markets around the world. As economies in the BRIC group and beyond... More
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  • Watch commodities in the crowded DXY trade 0 comments
    Jan 13, 2011 12:14 PM

    The dollar is selling off this morning but this may be more due to a big test in the equity market than anything else.

    Even though the DXY — the dollar index — is trending 1% lower this morning, there is no real accompanying move in the copper or oil markets. Normally, a substantive move in the dollar would trigger an opposite swing in the commodity markets, so a real dollar dip would leave copper and oil on the rise.

    But with commodities actually retrenching a bit from their highs, this looks like crossover action related to the S&P 500′s test of resistance at the 1,287-point level today. This is a very important test and the very fact that demand for dollars is weaker tells us quite a bit about how it may turn out.

    And the other side of the coin is that if commodities have decoupled from their once-slavish reverse correlation to the DXY, then fundamental supply and demand are a factor again. When that happens, as we say at EmergingMoney.com, “You don’t buy commodities when they are cheap. You buy them when they are expensive.”

    The trend is your friend.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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