The recent rise in the price of the dollar has been highlighting some of the interrelations between various pieces of the financial landscape. Yesterday, the dollar gained against 14 of the 16 other leading currencies around the world. That helped fuel all of the following:
* Gold dipped to a three-week low. It's lost almost $200 per ounce from its recent peak, much of that simply due to the fact that the resurgent dollar now buys more of the precious metal; the underlying price of gold may not have changed much at all.
* Oil dropped $1.31 a barrel to $72.62. The price of oil is now down 7.3 percent in the past week.
* Treasurys were up somewhat, as investors sold off gold and other commodities for the safety of the American dollar.
* Both the Dow and the S&P 500 were down about 1 percent, as the stronger dollar put a little dent in the profits of companies with international operations.
That's not to say there's a one-to-one relationship between the dollar's strength and each of these other outcomes, but they are definitely influenced by the dollar's performance. In a sense, it's unfortunate that we refer to a "stronger" or "weaker" dollar, because it's not an unalloyed good to have the dollar up, nor is it all bad to have the dollar down. It's just another piece of the puzzle.
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