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USDJPY and USDCHF May Be Signaling a Decoupling from the Stock Market

The hard sell-off in the U.S. stock market did not attract heavy selling in the USDJPY or USDCHF. This may be the first sign that the Dollar is decoupling from the Yen and Swiss. For months, the Dollar would rally while the stock market rose and fell on weak stock market days.

Wednesday's trade indicates that the possibility of an economic recovery in the U.S. rather than the carry trade may be the new driving force behind a rally in the USDJPY and USDCHF.

Watch the action in these markets over the next few days to see if the Dollar gets stronger while the stock market weakens.

USDCAD is Comfortable at Par.

Despite the developing strength in the U.S. economy, there was very little buying in the USDCAD as traders instead decided to focus on the strong crude oil's influence on the Canadian Dollar.

At this time, traders feel that the runaway rally in the crude oil will have a more positive effect on the value of the Canadian Dollar as the Canadian economy relies so much on commodity exports. As long as crude continues to rally, look for the USDCAD to hover around the1.00 area.

The longer-term fundamentals support a stronger USD so any weakness in the energy complex is likely to send the U.S. Dollar soaring. Until this happens, stand aside or be willing to trade both sides of the market.

Lower Commodity Prices Hurt AUDUSD and NZDUSD

The AUDUSD and NZDUSD fell on Wednesday as lower commodity prices, especially in Gold, and the prospects of firmer U.S. interest rates caused longs to lighten up their positions.

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