US Dollar Index testing its short-term uptrend line

The US financial crisis has taken a heavy toll on the US Dollar. The USD index peaked at 80.38 point on September 11th & has corrected back to its short-term uptrend line support of 78 point as at yesterday. A break of this uptrend line would send the USD index back to its horizontal support of about 74-75 point (see Chart 1 below).


Chart 1: USD Index's daily chart as at September 17, 2008 (source: Stockcharts.com)

Commodities have benefited from the on-going correction in the USD. From Chart 2 & 3 below, we can see that WTIC & CRB have been rebounded off their recent low. The biggest rally was seen in Gold, where Gold for immediate delivery surged $84.67, or 11 percent, to $864.42 at 4:42 p.m. New York time. For the 1 year chart, see Chart 4 below. For current 24-hour Spot Gold, go here.


Chart 2: WTIC's daily chart as at September 17, 2008 (source: Stockcharts.com)


Chart 3: CRB's daily chart as at September 17, 2008 (source: Stockcharts.com)


Chart 4: Gold's daily chart as at September 17, 2008 (source: BullionVault.com)

If the USD index were to break below its uptrend line support of 78 point, the CPO prices may also rebound. This would be positive for plantation stocks, especially since they are so badly beaten down. I believe stocks, such as IOI, PPB, KLK, Asiatic & Sime, could rebound back if this scenario happened.