Stock Market Gains as U.S. Dollar Drops

Businesses around the world are noting the movements in financial markets today. A few very interesting things happened today, on a day that might otherwise have been sort of boring. Despite the fact that there really isn’t any major economic data being released, there is plenty for the financial markets to chew on.

First of all, a U.N. panel issued a report that stated that the recent global financial crisis could, in part, be laid at the feet of the prevalence of the U.S. dollar in global trade, and reliance on it as a global reserve currency. That news sent the U.S. dollar down. And, as a result, gold and oil prices — which often move inversely to the U.S. dollar — shot higher.

Gold has breached the $1,000 an ounce mark for the second time this year, and oil prices are heading generally higher. The stock market is climbing as well, but that may have more to do with Kraft’s pursuit of Cadbury. There are hopes that this deal — if it gets done — could spur a renewal of merger and acquisition activity on a global level. It’s a regular party of Wall Street. At least for now.

In the end, though, how well the dollar does and how well other investments do remains to be seen. There is a general expectation that the dollar will weaken as the economy recovers, and that could actually make exports more desirable to other countries. However, since many U.S. businesses no longer are concerned with exports, a weaker dollar could actually mean losses in overseas transactions.

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