Should You be Worried About the Rising U.S. Dollar?
Currencies / US Dollar Sep 10, 2018 - 02:00 PM GMTBy: Troy_Bombardia
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
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
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