Analyzing intermarket relationships provides insight into the fundamentals that are driving markets. One relationship to watch is the trend of the dollar and the potential for a weak dollar to lead to higher commodity prices.

Over the past five years, a weak dollar relative to the euro was considered good for U.S. companies with overseas business because it gave them a competitive advantage in the global arena. "The Euro FX vs. the E-Mini S&P and 10- year T-note" (Currency Trader, May 2005) looked at the relationships between these three markets and examined the trending characteristics of each over different time frames. Here, we will build upon the relationships between the euro and the stock market, looking at one sub index in particular: the Morgan Stanley Commodity Index, an equity index that tracks companies that produce basic commodities.