It still amazes to this very day that China could decline by over 5.0 percent and Ireland could be on the verge of bankruptcy that as long as the U.S. Dollar Index declines all is well. The S&P 500 e-mini futures traded as low as 1193.00 at 3:00 am EST. This is the exact same time when the U.S. Dollar Index traded as high as $78.48. Since that time the the U.S. Dollar Index is trading back down to $77.80 and the S&P 500 e-mini is trading higher at 1203.25. That is a huge bounce in the S&P 500 Index on the back of the declining U.S. Dollar Index.
If there is one thing that you can derive from this is that the U.S. Dollar Index is still the most important factor in the trading universe. When the dollar declines the stock market inflates right back up. The opposite is true when the U.S. Dollar Index rallies higher the stock market indexes simply deflate and trade lower. Therefore, today’s action will be all about the direction U.S. Dollar Index. It is important to also note that today is a Friday and a POMO day by the Federal Reserve. This means that the markets rarely sell off much on a Friday and generally finish the session flat. We shall see.
