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As the dollar makes a comeback, stocks could take a hit
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Loading...The U.S. dollar is beginning to enjoy a bullish turnaround after declining for much of this year, and some strategists are watching for how its recent gains will impact equity markets domestically and abroad.
The dollar has moved higher over the past three weeks, pointed out Matt Maley, equity strategist at Miller Tabak. Indeed, the dollar index rose to its highest level in about seven weeks on Tuesday, trading up near its highest level since mid-August (just below the 94 mark) before giving up some of its gains. Should the index break above 94, it will have seen its first "higher high" of the year, Maley said.
"Any meaningful move above that level would signal that the intermediate-term trend in the dollar has shifted to the upside," he wrote.
Should this bounce continue, domestic markets with large multinational companies would likely take a hit, as the negative impact of a stronger dollar on foreign earnings begins to be felt.
Commodity markets such as crude oil and metals, priced in U.S. dollars, could also feel pressure from a stronger greenback.
Source: Bloomberg Pro Terminal
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