Money & Investing – Banks.com

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Things are getting interesting right now in the financial markets. The U.S. dollar is heading higher as bulls cheer yesterday’s Fed statement. Indeed, Ben Bernanke expressed something akin to optimism about the future of the economy, indicating that the Fed will soon begin to take measures to withdraw from economic stimulus. Dollar bulls took this as an indication that fundamentals remain reasonably intact, and prompted a rally in the dollar. As a result, commodities were trading lower, reports The Street:

The U.S. dollar was trading higher Thursday, with the dollar index recently up by nearly 1%.

The dollar’s strength pressured gold prices as the February contract shed $18.40 to $1,117.80 an ounce.

Crude oil was also trading lower Thursday, after surging Wednesday on an Energy Department report showing lower inventories last week. The January crude contract was last down by 41 cents at $72.25 a barrel.

Commodities often move inversely to the U.S. dollar on the financial markets.

However, the dollar is gaining steam due to the latest movements by the stock market. With stocks falling on the prospect of increased interest rates in 2010, the fact that jobless claims are on the rise again and the news that the financial sector continues to struggle, some investors are looking at the dollar for its stability and safety, rather than becoming truly bullish about it.

Today is definitely an interesting day on the markets. It will be interesting to see how long the U.S. dollar can maintain this rally, and it will be interesting to see when the stock market rally starts again in earnest, rather than the recent moderation that has been seen. Today, the Dow is down 85 points in mid-morning trading.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.