Unwinding the Short Dollar Trade

The biggest effect so far based on Friday’s better employment news is the rise in the dollar.  So far the dollar index has risen well above its 50 day average.  The important points at which we would see a wholesale reaction would be first if the Dollar Index DX closes above its 100 day average at 77.10 and secondly the October highs of 77.50.  The long gold and commodity trade is already feeling an effect. 

Stocks on the other-hand are so far trying to play the better employment news as a positive.  Our guess is that there are too many overlapping speculative trades to allow stocks to break away from the dollar impact.

8:34 AM CDT