Dollar Runs As Metals And Other Currencies Stumble

Commodities and major currencies declined today as the dollar shows it hasn't yet lost the “safe haven” aura it has held for so many years. The dollar strengthened against most currencies including the Euro, Aussie and Canadian dollars and others while oil and metals fell yet again, along with U.S. stocks in general. According to Nick Nasad of FXTimes, a variety of factors came in to play to the dollar's advantage. Oil declined resulting from a much higher than expected inventory increase, combined with increased margin requirements imposed by the CME. There is also concern about interest rates increasing around the world as more nations, especially China and in Europe, report increasing inflation. This will put more pressure on various central banks to raise interest rates, which in turn will negatively affect commodities. The Euro is under pressure from issues related to the support and/or bailout of Greece, Portugal and possibly others. Reaching an agreement between the European nations may be difficult due to the political disagreements along with the protests in Greece. Germany in particular needs assurances that any nation receiving aid is doing all it can to reform its practices. As commodities decline, so will currencies linked to commodities such as the Australian, Canadian, and New Zealand dollars. Silver declined today much more sharply than gold, with silver dropping nearly 8 percent compared to around 1 percent for gold. The recent run up in gold and silver may have ended for the time being if traders become more risk averse. Any interested dollar traders may want to consider ETF's such as PowerShares DB US Dollar Index UUP or the PowerSharesDB Dollar Bearish Index UDN. Traders considering silver plays can consider the iShares Silver Trust Fund SLV or the ProShares UltraShort Silver ETF ZSL. Traders wishing to follow gold can consider the SPDR Gold Trust GLD, ProShares Ultra Gold UGL or the Market Vectors Gold Miners Fund GDX.