U.S. stocks are getting no help from the dollar's advance today -- specifically the DXY Index's break above 92. That's around where the index's 200-DMA and trendline of its decline from the 2017 high converge, as the chart below shows.
It's not so much the currency hurting exporters, given a lot of U.S. corporates hedge their FX exposure. Rather, dollar strength is in essence a tightening of U.S. financial conditions, which adds to the frictions across rates, currency and equity markets, according to Bloomberg cross-asset strategist Tanvir Sandhu. All that could amount to lower risk-adjusted returns this year and beyond, making the dollar recovery trade especially painful is the fact that there remains a vast number of short positions out there.
One of the other notable casualties of dollar strength today is the euro, whose battle to stay above $1.20 looks like a losing one, especially with growing bearish catalysts over the next few months.
Source: Bloomberg Pro Terminal
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