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• EEM 83% Rate It

Risk on or risk off? These are stupid terms that oversimplify what is going on in the global financial markets, but they can be useful in the short term. The dollar index DXY ( quote ) closed right under 75 on Friday, which is a slight technical positive for the euro and the emerging markets. This level was closely watched throughout the day because it represents a small but appreciable move below the 50-day moving average that has served as support for DXY over the last few weeks. Unless DXY can reclaim 75, it now has resistance above it again -- as it has for most of the year to date. Month-end account settling played a role in Friday's action and the sentiment now seems to favor more comfort out of Europe where Greece and other euro risk areas are concerned. At this point, the currency markets are telling us that U.S. data releases have been weak enough to fuel a conversation on further U.S. stimulus if not outright action. I would not bank on this, but as they say, "perception is pricing." This is positive for emerging markets if not globally a growth-positive development. We might see EEM ( quote ) outperform SPY ( quote ) for awhile here. Compare EEM on top to SPY below it: We have also seen traders buying oil into the month end.

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