If you have been using the dollar as one of your primary indicators, chances are it has been a good year or perhaps even a good several years.
Stocks and the dollar do not always move in opposite directions, but for the better part of the last two years or so they have been doing just that, as the chart of the week below shows.
Note that the recent rise in stocks since the beginning of September has coincided with a declining dollar that has lost value in 15 of the last 18 weeks.
A weaker dollar has a number of influences on stocks, but the most notable is that it makes products and services cheaper in foreign markets. Some sectors benefit more than others. Heavy equipment and materials companies are beneficiaries of a weaker dollar, as is manufacturing in general. Technology is also a sector that is heavily dependent upon exports.
For now at least, the dollar is one of the strongest factors acting on stocks and commodities.
- Chart of the Week: Dollar Approaching Resistance on Weekly Chart
- Chart of the Week: Dollar Rising?
- Chart of the Week: Commodities and the Dollar
- Chart of the Week: U.S. Dollar Reverses Down
- The Dollar Is UUP
- An Eight Year View of the Dollar