From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
The US dollar marches to the beat of its own drum.
Interest rates are rising across the curve, sparking strength out of economically sensitive areas within stocks and commodities.
Crude oil and the energy-heavy CRB Index are breaking to new six-year highs and the energy sector SPDR is testing a crucial area of former support turned resistance — all while the US Dollar Index is catching a bid.
It’s not every day we see the dollar and commodities rally in tandem.
This environment suggests the dollar should be rolling over or chopping sideways at best. Yet it continues to show strength!
When markets don’t do “what they should,” that’s valuable information. And in this case, it raises some important questions.
How often does the historically inverse correlation between the dollar and commodities decouple?
And how long do these divergences in their relationship tend to last?
Let’s dive in to see if we can find some answers!