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How Low Will The Dollar Go?

May 16, 2011 10:08 AM ETCLF, X, FXE, UUP
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This morning, the U.S. Dollar Index futures(DX M1) are declining sharply lower by 0.32 cents to $75.61 per contract. Usually, when the U.S. Dollar Index declines the major commodity stocks will inflate and trade higher. Therefore, short term traders must keep one eye on the dollar at all times. 

Last week, the major stock market indexes came under pressure every time the U.S. Dollar Index rallied higher. Just look at the action in the market on May 13th, 2011. The major stock indexes declined sharply lower last Friday as the U.S. Dollar Index surged higher. 

Leading commodity stocks seem to be affected the most by a stronger U.S. Dollar Index. Therefore, when the U.S. Dollar Index declines trader should watch stocks such as Cliffs Natural Resources Inc.(NYSE:CLF), Freeport McMoRan Copper & Gold Inc.(NYSE:FCX) and United States Steel Corp.(NYSE:X). All of these stocks are positive this morning as the U.S. Dollar Index is lower on the trading session. Remember if the U.S. Dollar Index catches a bid higher these stocks will generally be the first stocks to sell off. 

Nicholas Santiago

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