The Canary in the Coal Mine yesterday, today, and probably into Fed Chair Yellen's speech on Friday morning, is the US Dollar, which has been grinding higher since its bear-trap low at 91.92 on May 3 into the 95.50 area, a three week push of 3.9% precisely at a time when investors were expecting a dollar breakdown after weeks of Fed vacillation about and back-pedaling on one more 2016 rates hikes.
However, during the month of May in general, and after the April FOMC Minutes were released on May 18 in particular, perceptions about a rate hike have rocketed.
The tip of the spear has been US Dollar strength, which appears to be convincing and preparing the financial markets, and investors, for a June or July rate hike.
Apart from the negative implications of a rising USD, The Dollar Index (DXY) is poised for a challenge of very important resistance between 95.50 and 95.90, which if hurdled, could send the Dollar rapidly higher.
Only a break below 94.60 will neutralize the positive DXY set-up.