A solid gain for the US dollar drove some serious volatility in
commodities today as gold and oil bounced around aggressively.
The falling yen pushed up the dollar as the Bank of Japan has
endeavored to drive down its own currency to boost its economy.
There may have also been a technical angle at play here as the
USD/YEN broke through the widely watched 100 level yesterday, which
set off a strong rally for the dollar.
The most immediate impact was in commodities. Crude oil fell as
low as $93.37, a 3% decline, before bouncing back above the $95
(NYSEARCA:GLD) saw a similar sharp decline in early trading, and
while it finished down, it did at least make a strong move off the
lows of the day at $1,418. There was also weakness in silver,
natural gas, platinum, and palladium, though curiously, copper was
However, it wasn't necessarily a "risk-off" day.
Dow Jones Industrial Average
(INDEXDJX:.DJI) was up only modestly, but the small-cap
(INDEXRUSSELL:RUT) saw a serious rally , and there were declines in
so-called "safe" assets like US Treasuries and German bunds.
So needless to say, without any major global economic news or
events to which we can attribute the market action to, it was quite
a confusing day.
However, Federal Reserve Chairman Ben Bernanke made some
interesting comments at a speech today during the Fed conference in
While there wasn't a great deal of commentary on monetary policy,
Bernanke did note that the Fed is watching for signs of excessive
risk-taking in the market, including "reaching for yield," which is
an interesting statement considering the surges in junk bonds and
If you recall, in the past, the Fed historically focused on a dual
mandate of price stability and maximum employment. This line of
discussion represents an extension of the Fed's increasing emphasis
on market activity.
Monday's Financial Outlook
With earnings season winding down, there are no major companies
reportingon Monday .
On the economics front, we'll see the April retail sales report
at8:30 a.m. EDT , with the March business inventories report
following at10:00 a.m. EDT.
Elsewhere, investors continue to debate whether we're headed
straight for a pullback based on seemingly positive sentiment.
However, the sheer quantity of market commentators specifically
describing equity investors as complacent seems awfully high (see
the Google News grab below), which is unusual for a market top, if
that's what we're heading into.
Click to enlarge
But then again, there's this: