ForexEzy
No Result
View All Result
  • Top Forex Advisors
    • Best Forex Robots
    • Best Forex Signals
    • Best Managed Accounts
  • Top Forex Brokers
    • Best Forex Brokers
    • US Forex Brokers
    • UK Forex Brokers
    • MT4 Forex Brokers
    • MT5 Forex Brokers
    • Zero Spread Brokers
    • Best PayPal Brokers
    • TradingView Brokers
    • Social Trading Platforms
  • Top Review Platforms
  • Forex Education
    • Getting Started
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
    • Forex VPS
  • Forex Forecast
  • Crypto
    • Best Crypto Exchanges
    • Best Crypto Bots
    • Crypto Guides & Forecasts
  • Top Forex Advisors
    • Best Forex Robots
    • Best Forex Signals
    • Best Managed Accounts
  • Top Forex Brokers
    • Best Forex Brokers
    • US Forex Brokers
    • UK Forex Brokers
    • MT4 Forex Brokers
    • MT5 Forex Brokers
    • Zero Spread Brokers
    • Best PayPal Brokers
    • TradingView Brokers
    • Social Trading Platforms
  • Top Review Platforms
  • Forex Education
    • Getting Started
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
    • Forex VPS
  • Forex Forecast
  • Crypto
    • Best Crypto Exchanges
    • Best Crypto Bots
    • Crypto Guides & Forecasts
No Result
View All Result
ForexEzy
No Result
View All Result
The World’s Leading Social Trading Platform
Try now
Home News

The Rise of the Dollar and Its Implications for the Stock Market

by Administrator Forexezy
September 20, 2023
in News
0
Stacks of coins with the word FOREX isolated on white background

Stacks of coins with the word FOREX isolated on white background

0
SHARES
11
VIEWS
Share on FacebookShare on Twitter

The U.S. Dollar Index (DXY) has experienced a recent surge, reaching a significant level. Should it surpass this level, there could be potential consequences for the stock market.

The Best Forex Robots Report Is Already Here!
best forex robots
Check out 30+ best expert advisors with daily updated live results and statistics
Click Here

The Strengthening of the Dollar

Over the past few months, the dollar has gained over 5% against a basket of currencies, reaching 105 on the DXY. This increase can be attributed to higher yields on U.S. government bonds, as inflation rates have remained stable. This attracts investors looking to acquire U.S. bonds, driving up the value of the dollar.

Impact on U.S. Stocks

A stronger dollar poses challenges for U.S. stocks. It diminishes the earnings companies generate when translating foreign sales back into dollars. Additionally, a stronger dollar reflects a preference for safe-haven investments as global economies struggle. These factors can exert pressure on U.S. stocks.

Limited Effect on Domestic Equities

Interestingly, the higher dollar has yet to significantly impact domestic equities. While the S&P 500 index has declined by approximately 1.5% since mid-July, this can be attributed primarily to profit-taking. Investors have seized the opportunity to sell after enjoying double-digit gains in the index this year, particularly due to one key risk. The delayed consequences of higher interest rates, intended to curb inflation, continue to ripple through the economy.

Resilience in Vulnerable Companies

Furthermore, the strength of the dollar has not deterred companies heavily reliant on foreign sales. Despite deriving around 60% and 50% of their sales outside the U.S., Caterpillar (ticker: CAT) and Micron Technology (MU) have observed respective increases of 16% and 13% since the start of the dollar’s ascent.

In summary, while the upward trajectory of the dollar raises concerns for the stock market, its impact has not been pronounced thus far. The resilience of domestic equities and companies exposed to a stronger dollar suggests the market remains steadfast amidst prevailing uncertainties.

The Dollar’s Potential Impact on Stock Market

The current ease that investors have about the strength of the dollar may soon be challenged as the dollar index approaches a crucial threshold. Although the dollar index has faced resistance around the 105 mark multiple times since late 2022, its inability to surpass this level suggests that the dollar may continue to fall short of recent peaks.

However, the situation could rapidly change if the dollar index manages to break above 105. Such a breakthrough would indicate a lack of sellers and potentially trigger a surge in buying pressure, propelling the index back to its multi-decade high of 112, recorded in October 2022. Even if this milestone is not reached, an appreciation in the dollar’s value could pose challenges.

The possibility of a stronger dollar becoming a headwind for stocks is a concern raised by Tom Essaye of Sevens Report. If the dollar gains strength, it could create obstacles for the stock market.

One plausible scenario for dollar gains lies in the widening gap between U.S. and foreign-bond yields, making U.S. bonds more attractive to investors. Currently, the 10-year Treasury yield stands at just over 4%, while the German bund yield is slightly above 2.7%. Should Germany’s economy weaken, potentially approaching recession territory, the 10-year bund yield may decrease, resulting in funds flowing into U.S. bonds and strengthening the dollar’s position. Moreover, economic weaknesses in other countries could prompt investors to seek stability in their portfolios by turning to the dollar.

Higher risks could be in store for stocks if the dollar continues to strengthen. It is crucial to closely monitor the currency’s performance.

To learn more, contact Jacob Sonenshine

The Best Forex Robots Report Is Already Here!
best forex robots
Check out 30+ best expert advisors with daily updated live results and statistics
Click Here
Tags: Dollareconomyforeign salesstock marketU.S. stocks
ShareTweet
Previous Post

TradeSanta Review

Next Post

Microsoft’s Appetite for Acquisitions: Insights from Leaked Documents

Related Posts

Liang Wenfeng: From the AI Trading of TechBerry to DeepSeek’s Game Changing R1 AI model

by Administrator Forexezy
February 11, 2025
0

It was just a couple of weeks ago that the well-known Chinese startup DeepSeek released its AI model to the...

Amid Challenges, Reforms, 15 Insurance Companies Declared N142.2bn PBT in 2024

by Administrator Forexezy
February 9, 2025
0

Despite challenges and the ongoing reforms, 15 insurance companies listed on the Nigerian Exchange Limited (NGX), declared N142.2 billion profit...

These 3 Cryptos Could Explode in 2025, But Which One Will Gain 30x? Tron (TRX), Solana (SOL), or Rexas Finance (RXS)? – Blockonomi

by Administrator Forexezy
February 8, 2025
0

The cryptocurrency world constantly shifts and changes as new projects are started and existing ones are maintained through innovation. As...

US dollar exchange rate continues to decline in Iraq

by Administrator Forexezy
February 4, 2025
0

Baghdad (IraqiNews.com) - The exchange rate for the US dollar compared to the Iraqi dinar declined on Tuesday in the...

Westgold Resources: FY25 Guidance Update

by Administrator Forexezy
February 2, 2025
0

PERTH, Western Australia, February 3, 2025 /CNW/ - Westgold Resources Limited (ASX: WGX) (TSX: WGX) (Westgold or the Company) provides...

Load More

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Best Forex Automated Systems

  • TechBerry 9/10
  • Happy Galaxy 8.5/10
  • Forex Cyborg 8.5/10
  • Forex Fury 8/10
  • FXgoodway 7.5/10
  • Best Forex Brokers
  • Best Forex Robots
  • Best Forex Signals
  • Best Forex Managed Accounts

Top Trading Markets

We are dedicated to demystify the world of forex trading for you – no matter what level you are on.

Categories
  • Automated Trading
  • Crypto Robot Review
  • Cryptocurrency Trading
  • Day Trading
  • Forex Basics
  • Forex Brokers
  • Forex Education
  • Forex Forecasts
  • Forex Indicators
  • Forex Market Commentary
  • Forex Robots
  • Forex Signals
  • Forex Signals
  • Forex Tools
  • Forex Trading Strategies
  • Forex VPS
  • Fundamental Analysis
  • Managed Accounts
  • Money Management
  • News
  • Review
  • Review Platforms
  • Risk Management
  • Social Trading
  • Technical Analysis
  • Top World Traders
  • Trading Apps
  • Trading Psychology
  • Uncategorized
Tags
Acquisition AI Amazon Apple Artificial Intelligence Bitcoin bond yields CEO China earnings earnings report economy Electric Vehicles Federal Reserve financial performance Financial Results forex ea forex software reviews Growth Guidance Housing Market inflation interest rates Investing investment Investors Market Volatility merger mortgage rates net profit Nvidia Oil prices Q2 Results revenue Revenue Growth Sales sales growth Stock Futures stock market stock performance Stocks strategies technology Tesla Video
  • Terms of Use
  • Privacy Policy
  • Compensation Disclosure
  • Risk Disclosure
  • About Us
  • Contact Us

Copyright © 2023 by ForexEzy.com

No Result
View All Result
  • Top Forex Advisors
    • Best Forex Robots
    • Best Forex Signals
    • Best Managed Accounts
  • Top Forex Brokers
    • Best Forex Brokers
    • US Forex Brokers
    • UK Forex Brokers
    • MT4 Forex Brokers
    • MT5 Forex Brokers
    • Zero Spread Brokers
    • Best PayPal Brokers
    • TradingView Brokers
    • Social Trading Platforms
  • Top Review Platforms
  • Forex Education
    • Getting Started
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
    • Forex VPS
  • Forex Forecast
  • Crypto
    • Best Crypto Exchanges
    • Best Crypto Bots
    • Crypto Guides & Forecasts

© 2023, Forexezy. {copy} {year}