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Should You be Worried About the Rising U.S. Dollar?

Currencies / US Dollar Sep 10, 2018 - 02:00 PM GMT

By: Troy_Bombardia

Currencies

The U.S. Dollar Index has been going up over the past 5 months, driven higher by Trump’s trade war.

This has some stock market traders worried, because economic theory states that “a rising U.S. Dollar is bad for the economy and stock market”.


I demonstrated last year that a rising U.S. Dollar isn’t consistently bearish for the U.S. stock market. We can look at this from another angle.

The U.S. Dollar’s year-over-year rate of change has exceeded 4% for the first time in 1 year.

Historically, the U.S. Dollar’s forward returns are mostly random.

But on a more interesting note, the S&P 500’s medium-long term returns (6+ months) are actually consistently bullish when the USD goes up!

Conclusion

There are several things that medium-long term traders should worry about: namely, the fact that it’s hard for the U.S. economy to get much better. However, a rising U.S. Dollar isn’t one of those worries.

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By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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