Rally in the dollar leading to weakness in commodity related sectors
The dollar's ascent that began on a short covering rally/profit taking combined with outright euro selling overnight has sent the dollar to fresh gains on the week and a retracement of nearly 200 points on the euro's record runup (currently at $1.5703/euro). Strong durable goods orders this morning also helped, but the weaker than expected New Home Sales data has slowed the pace of the dollar gains... The increase in the dollar is having an impact on the dollar sensitive commodity sectors this morning, with a notable reaction taking place in the ag space. The ag space has benefited primarily from high prices, with the weaker dollar fueling exports. The group has shown leadership recently, but is seeing a second day of profit taking taking today, with MOS -6.2%, POT -4.5% (also reported earnings), CF -7.5%, TRA -4.5% (reported earnings), MON -4.2%, AGU -4.0%... Other sensitive sectors such as steel (SLX -3.2%), gold (GDX -2.7%, GLD -1.7%), Silver (SLV -2.0%), oil (XLE -2.3%, OIH -2.5%, USO -0.6%) are weaker as well.
