It seems like almost every day Iran is in the news, and today is no different. Oil prices have moved higher after reports that Iranian naval vessels had stopped a racing yacht with 5 U.K. nationals aboard.

Oil is up $1.30 a barrel to $77.35, and traded up as high as $78.00 earlier in the day.

Typically, markets conform to historical tendencies. But sometimes they don't. Tuesday was one example of the latter regarding the dollar in the currency market.

Despite a two-week-long move that saw the dollar strengthen against the world's major currencies, the greenback's rally continued early Tuesday, as lower commodity prices reduced their appeal as an inflation hedge and an investment. Oil, the world's most important commodity, fell $1.16 to $113.42 per barrel early Tuesday.

The dollar rose about one-quarter cent to $1.4875 versus the euro and about 1 cent to $1.9022 versus the British pound in Tuesday trading.

The dollar has strengthened about 6% versus the euro and about 4.5% versus the British pound in the past two weeks, and London-based economist Mark Chandler told BloggingStocks Tuesday further strengthening against the pound is likely, after a correction.

Dollar overbought, but rising

"The dollar should have corrected by now, given that it's registered a remarkable move and it's over-bought short-term, but markets can overdo it from time to time, so who knows when the correction will occur," Chandler said. "But longer-term I see further dollar gains against the pound, due to our [United Kingdom's] slowing economy."

David Malpass of Bear Stearns wrote a great op-ed piece on how to interpret the trade deficit. The full article can be found on the Forbes Digital Rules blog.

Here are some some of his thoughts:

• The imbalance, the trade deficit and related capital inflow all link the faster-growing U.S. with other aging, slower-growing economies. They are a reflection of growth in the U.S., not weakness.
• Despite our trade deficit and other countries' trade surpluses, the U.S. economy has created 9.3 million new jobs since the 2001 recession, compared with 360,000 jobs in Japan and 1.1 million jobs in the European zone, excluding Spain.
• Speaking of Spain -- like the U.S., Spain (3.6 million new jobs) and the U.K. (1.3 million new jobs) also ran trade deficits and created jobs rapidly during these last five years.
  
• The recent upswing in the U.S. trade deficit partially reflects the shift in the demographics of the world's large economies. The under-60 population in the U.S. is expected to grow for at least 50 years, whereas the under-60 populations in Japan and Europe is already in a decline and China will also be in a decline within a decade.

We have blogged in the past on how the trade deficit has been misinterpreted by economic pundits for years. In my opinion, David Malpass is one economist who gets it right.

General Electric has a few news items this morning for investors to digest -- or ignore, as the case may be. None of it looks very major. It's just the usual mix of deal talk and and legal wrangling. Here's the headlines:

- A South African firm, Sanlam, is in talks with GE to buy its U.K. life insurance business. Sanlam later confirmed that was true, but called talks "embryonic."

- GE Capital and Arden Capital Realty have agreed to settle class action law suits filed by shareholders who protested terms of their pending merger. GE's real estate group is buying Arden for about $5 million, plus assuming its debt.

GE's stock opens this morning at $33.97 and I doubt this news will have much impact, although I think both are mild postives for GE.