The markets are trading flat to slightly higher on extremely light volume. The Federal Reserve began their two day policy meeting and will announce the results tomorrow at 2:15pm ET.  This is the major contributing factor to the light volume.  What makes today so interesting? Simply put, the dollars action in regards to the the markets.  The dollar is getting absolutely blasted today.  In fact, after two days of bounces, the dollar has just hit a new 52 week low.  The interesting facet to analyze is the markets are only up slightly on the day.  This can be looked at as a possible change in character for the markets.  Usually any minor weakness in the dollar gives a big push to the markets to the upside. A solid down day on the dollar gives an even bigger pop.  Yet here we sit, watching the dollar get smoked and the markets are just slightly higher on the day.  Could this be the start of a decoupling of the US dollar from the US markets?  Could we be looking at a major change in character.  Or are the markets overbought to the point of exhausting and cannot go any higher in the near term.  It is interesting to note as well that the dollar is at its 52 week lows and oil is still hovering $5 or so off its highs.  If you analyze that difference, that tells us that oil has dropped slightly in recent weeks due to a down grade of the global demand.  If it was not a demand issue and purely a dollar play, then oil should be at new highs just as the dollar hits new 52 week lows.  This dollar continues to be the driving force behind any major move in the markets though it may be starting to weaken slightly.  Watch the dollar closely as there is 195 billion in auctions this week and the FOMC Policy Statement on Wednesday at 2:15pm ET.  Most likely, we are in for a wild ride. The question is, which way do we go!

By: Gareth Soloway
Chief Market Strategist