Dollar Index hits 10months high as Euro corrected to 10month low against the dollar after ratings agency Fitch downgraded Portugal, fuelling more concerns about the euro zone's stability. European shares fell on Wednesday and Commodity started to correct with Crude, Gold and industrial metals declined.
The dollar index hit a 10-month high of 81.732 as the downgrade and jitters ahead of the EU summit prompted traders to sell currencies perceived to be higher risk for the safe-haven dollar, which also pushed it to a one-month high versus the yen. Diminishing risk appetite sent the MSCI world equity index down 0.5 percent to 305.32, while U.S. crude oil prices fell 1.6 percent. http://in.reuters.com/article/businessNews/idINIndia-47172620100324
http://www.bloomberg.com/apps/news?pid=20601087&sid=axcFWcIiCP4g&pos=2 Euro Weakens on Greece, Portugal Debt Concern; Commodities Drop
What Is Dollar Index And Why Is Their So Much Importance To It? http://akprabhakar.blogspot.com/2009/11/what-is-dollar-index-and-why-is-their.html
Risk factors if Dollar were to get strong:
Dollar Index from high of 120 in Jan2002 has been correcting and saw a low of 70 in March2008 and strength in Dollar is not because U.S economy is strong but problem in Europe and failure of alternate currency is a bigger problem. This would mean that cheap cost Dollar investment abroad will see a square-off leading to Dollar carry trade and Commodity stocks will face the pressure immediate.
Nifty not crossing 5310 which is January 2010 high and moving below 5080 would be first sign weakness in market.
