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How a Stronger Dollar Creates
Winners and Losers
By www.ProfitableInvestingTips.com
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
A strengthening US economy and the
prospect of more interest rate hikes by
the Federal Reserve have helped the
US dollar stop its recent slide.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
But how does a stronger dollar affect
the economy and the stock market?
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Before We Continue…
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http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Today we look at how a stronger dollar
creates winners and losers.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
CNBC writes that stocks could take
a hit as the dollar strengthens.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
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.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Should this bounce continue, domestic
markets with large multinational
companies such as the S&P 500 would
likely take a hit, as the negative
impact of a stronger dollar on foreign
earnings begins to be felt.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Commodity markets such as crude oil
and metals, priced in U.S. dollars,
could also feel pressure from a
stronger greenback, as could
emerging markets, Maley wrote.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
The inverse moves in the large
emerging markets exchange-traded
fund, the EEM, were “incredibly exact”
the last two times the dollar reversed,
he wrote.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Specifically, he pointed to the period
between September and December of
last year, as well as the period
between this January and late
September.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Since oil is priced in US dollars the cost
of oil goes up in foreign markets when
the dollar strengthens.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
This creates losers, especially in
developing economies.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
US exports also become relatively more
expensive when priced in US dollars
which can hurt US manufacturing.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
US exporters may continue to price
their products offshore in local
currencies and that will allow them to
keep their customers but will eat into
their profits.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
In the end US exporters are losers with
a stronger dollar and foreign
competitors are winners.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
High Stock Prices Based
on Earnings
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
The US stock market is priced at
historic highs based on price to
earnings ratios.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
But as earnings continue to impress
investors keep buying.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
This is the intrinsic stock
value approach.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
So long as earnings stay strong, stocks
will remain high.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
But a stronger dollar could eat into
profits and that would create winners
and losers in the US stock market.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Poor Gold
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Gold is a refuge in times of economic
and social turmoil.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Gold is what you buy when you no
longer trust the stock market or paper
currencies.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
But what happens to gold when the
dollar goes up and stocks are hot?
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
CNBC reports that gold is at a seven
week low.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
Gold sank as low as $1,271 on
Tuesday, its lowest level since Aug. 9.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
And some strategists see the yellow
metal falling further still.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
“The fundamentals for gold in the long
term are not very good.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
If you look at how gold tends to
perform, it basically moves opposite
interest rates or the dollar,” said Gina
Sanchez, CEO of Chantico Global.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
As the market enters a rate
normalization cycle, rates are likely
going to rise, and with it the dollar,
adding to the pressure on gold, she
said Monday on CNBC’s “Trading
Nation.”
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
If you are interested in gold
investments consider when to enter
and when to exit the gold market and
which vehicles to use.
http://profitableinvestingtips.com/profitable-investing-tips/how-a-stronger-dollar-creates-winners-and-losers
For the time being gold is a loser as the
dollar strengthens and interest rates go
up.

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How a Stronger Dollar Creates Winners and Losers