The rising US-Dollar is not based on internal strength but on Irelands banking problem in the Euro zone. What will come next?

1. Currencies

Today, November 16, 2010, the key market influencer was the US-Dollar. So why did we see the Dollar rising. Not because of internal strength, but because of financial trouble in the Euro zone. After Greece getting bailed out it looks now that Irelands Banking system need the support of Brussels, which increases the overall amount of Euro floating and by that the Dollar in relation increases.

If we look at the dollar value it is composed of:

Euro 57.6%

JPY 13.5%

GBP 11.9%

CAD 9.1%

S-Krona 4.2%

CHF 3.2%

Others 0.5%

So when the Euro Drops, the US-Dollar Rises

2. US Economic Indicators

Basically positive, even so on a small scale, but the rising dollar made the market tumble today:

The National Association of Home Builders said its homebuilder confidence index rose to 16 in November from a downwardly revised 15 in October. Economists had been expecting the index to edge down to 15 from the reading of 16 originally reported for the previous month.

The Labor Department said its producer price index rose by 0.4 percent in October, matching the increases seen in each of the two previous months. Economists had been expecting the index to increase by a more significant 0.8 percent.

Excluding a jump in energy prices as well as a modest drop in foods prices, the core producer price index fell by 0.6 percent in October after edging up by 0.1 percent in September. The drop came as a surprise to economists, who had expected core prices to increase by 0.1 percent.

Meanwhile, the Federal Reserve said that industrial production was unchanged in October after falling by 0.2 percent in September. Economists had been expecting production to increase by 0.3 percent.

3. Stock Market

Wal-Mart (WMT) reported third-quarter net income of $0.95 per share, topping estimates for earnings of $0.90 per share. Sales came in at $101.2 billion, short of consensus estimates for $102.43 billion for the quarter.Wal-Mart also forecast fourth quarter earnings of $1.29 to $.133 per share, above the $1.28 per share mark forecast on Wall Street.

Home improvement retailer and Dow component Home Depot Inc. (HD) posted third-quarter earnings of $0.51 per share, just above the $0.48 per share estimates for the period. Quarterly sales totaled $16.6 billion, above the $16.59 billion expected for the quarter.

4. Bonds and Notes

The big sell off on Bonds and Notes continues and might have found a potential bottom today. Interesting how the market exited bonds so rapidly even so a big demand will be generated by the Fed, buying back $600 billion in Bonds.

5. Commodities

On the front of commodities, the rising US Dollar did his dues and we are showing landslides to the downside: Gold, Crude Oil, Wheat, Sugar whatever you touch is on run down.

6. Conclusion

All securities cannot run into one direction, one side has to give: Bonds or Socks, Stocks or Commodities. The dollar strength is theoretical and might find a top at 80 Cents (/DX Dollar Index).

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