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Why You Should Keep an Eye on the US Dollar Right Now


The greenback has a big impact on the movement in stocks.

If you haven't noticed, the US dollar has had a nice rally this week. As shown below, the dollar remains in a long-term downtrend, but it has just broken back above its 50-day moving average after a big run-up over the last four days. The last time the dollar got back above its 50-day, it didn't last long, but this is something to keep an eye on in the coming days.

As we point out all the time, moves in the dollar have a big impact on the movement in stocks. Companies that generate the bulk of their revenues outside of the US do well when the dollar is declining, while companies that generate the bulk of their revenues domestically do well in a rising-dollar environment. If this bounce turns into a longer-term rally, we'll likely see rotation out of the internationals and into the domestics.

This article was originally published by Bespoke Investment Group.
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