The dollar at crossroads

thumb_9.18.09_ici_dx_a0_m_--_us_dollar_indexThe US dollar index, which measure the performance of USD against EUR, JPY, GBP, CAD, CHF and SEK, is trading right at the October 2007 closing price of 76.52. October 2007 was when the DOW and SPX made all time highs (10/11/2007) and this week's close (9/18/2009) is at 76.45. Note that while the equity markets topped out in October 2007, the dollar did proceed lower helping send commodities, especially oil, to new highs in 2008. It was not until the summer of 2008 that both commodities and equities crashed together in a frantic rush to raise cash. But traders need to stay focused on the fact that entire equity rally off the 2009 March lows was right in line with the dollar drop from its 2009 high. It will not be surprising to see a battle centered around the dollar index and the 76.50 level.