The Greenback Comes Back

Things are looking up for George Washington, as the dollar has staged a solid comeback after losing nearly 10% in 2017 and an additional 4% in January. Since its February lows, the U.S. Dollar Index has rallied more than 5%. This comeback is notable since the dollar has a significant impact on international trade and U.S. corporations’ overseas profits.

Given then dollar’s recent strength, what may lie ahead?

LPL Research Chief Investment Strategist John Lynch explains, “The dollar may continue its run in the near term, driven by rising U.S. interest rates, weaker than expected economic data abroad, and repatriation of overseas cash, as our LPL Chart of the Day shows. However, we are mindful that longer-term structural forces, including U.S. current account and budget deficits, may limit dollar gains and eventually lead to a resumption of the dollar’s long-term downtrend.”

Please see our Weekly Economic Commentary for more on dollar drivers and our outlook.

 

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Technical analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

International and emerging markets investing involves special risks, such as currency fluctuation and political instability, and may not be suitable for all investors.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured.  These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency.  The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Member FINRA/SIPC

For Public Use— Tracking # 1-733421 (Exp. 05/19)