US stocks spiked higher on Friday (April 18) following outstanding earnings reports from both Google and Citi. The dollar… … was also a hot buy as strong earnings from large companies is seen as supportive of the economy and the potential for a dollar rebound. Interestingly, despite the surge in the dollar, oil and gas both climbed again to new records.

The dollar surpassed 104 yen on Friday for the first time in several weeks. The dollar touched 97 yen early in March before starting a gradual move back over 100 yen. Today’s jump actually touched 104.75 before falling back below 104 late in the day. This was the strongest move by the dollar against the yen for a couple months.

The dollar also pushed up against the Swiss franc, nearly touching 1.03 francs before falling back below 1.02 francs. The Euro got just a fraction of a pip away from touching $1.60 overnight before the dollar resisted and drove the value all the back near $1.57. One Euro is now worth $1.5788. The pound had also climbed back over $2.00 before being knocked back around $1.99

The dollar has been holding up firmly in the last several weeks after its perpetual fall touched record lows against many major currencies. The dollar has been more resistant to negative news and more reactive to positive news in recent weeks. This suggests that if the US economy can improve in the second half of 2008, the dollar could see a powerful move.

An interesting paradox occurred Friday, considering recent trends in the dollar and commodities. Often, as of late, dollar gains have coincided in drops in oil and retail gas prices. The inverse has been true as well. Today was different, however, as oil and gas both spiked to new records. This was largely because of other market factors that had more effect than the dollar gain. Political unrest that resulted in damage to Nigerian oil refineries was said to be the culprit for the oil increase.

Crude oil futures climbed to $117 in New York, to set a new record. According to AAA and the Oil Price Information Service, the national average retail gasoline price was $3.445 per gallon today. This was a 2.7 cents rise overnight. Gas has jumped nearly 20 cents in the last couple weeks. Many analysts have project $3.60 for the busy summer driving season, but the more pessimistic view of $4 per gallon seems logical at the moment.

It is quite possible that if big names continue to shine with strong earnings, the dollar could continue to improve. This should generally lead to a drop in oil and gas prices, assuming political unrest, market factors, and supply and demand remain somewhat steady. Reduced crude supplies or increased demand could impact prices. The reason the stronger dollar often lowers oil and gas prices is that the US is reliant on much foreign supply for these commodities, so a stronger dollar improves buying power in the global marketplace.

US taxpayers are just a few weeks from seeing their share of the $168 billion tax rebate stimulus package. The IRS said it would process direct deposit rebates on May 2nd and checks would be mailed May 16th. Those that completed their taxes and submitted them online should receive the earlier direct deposit.

Analysts are anxious to see what Americans do with their rebates. The hope is that consumers will buy and boost the economy. This economic improvement would likely improve the dollar and should ultimately reduce consumer prices. Americans are anxiously awaiting estimates of the first quarter gross domestic product to see what the latest news is regarding a recession.

Market Recap

US equities gained sharply on Friday, mostly driven by outstanding earnings from both Google and Citi. The Dow is currently up 200 points heading into the last half hour of afternoon trade. The index is closing in on 13,000 again, currently at 12,820. The NASDAQ and S&P are up 57 and 20 points at the moment. Oil and gas both reached new records. Oil futures touched $117 per barrel, while national average retail gas prices were $3.445. The dollar surged strongly against most major currencies.