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Weak Dollar Limits Downside For Crude Oil

Over the last few month, the U.S. dollar index, after gaining ground to record highs immediately following the election, has been in a sustained decline since the end of last year, and is now at two and a half year lows. Some would have you believe that that is not a major influence on certain markets, particularly domestic energy markets such as WTI and natural gas, but they are, to put it simply, wrong.

(Click to enlarge)

One of the biggest mistakes that those new to any market frequently make, is to become far too specific in their area of interest. If, for example, you decide that the energy markets are the most dynamic there are, with conflicting influences creating good two-way movement and therefore an opportunity for good trading profits I could not argue if you decided to concentrate your trading efforts there. Even if you get even more specific and restrict yourself to natural gas or oil futures trading, that is fine. If, however, in doing that you decide to ignore other markets you are making a mistake.

Traders in dealing rooms tend to have very specific areas of focus. I, for example, traded one currency pair in one time-period only, but when you see a picture of a trader at work they are always surrounded by screens. They have live price feeds and charts for a whole host of things other than those that they actually trade. But there are certain things that every trader, regardless of specialty, watches. The S&P 500, U.S. Treasury yields,…




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