![]() ![]() While Japan hinted Friday it could gradually begin to raise rates, sending the yen up against the dollar, the European Central Bank said Thursday it could pause at its next meeting in September. The dollar also likely doesn’t have more room to slide, says Seema Shah, chief global strategist at Principal Asset Management. The dollar’s decline could offer some support to tech earnings, further boosting those stocks and in turn the broader rally.īut any benefits from a falling dollar to corporate earnings will likely be limited, says Jones. Last year, an unfavorable exchange rate weighed down the top lines of tech companies, including Salesforce, Microsoft and Apple, which tend to generate much of their revenue overseas.Ī monster run in tech stocks has driven much of the market’s gains this year. Why does that matter? The dollar’s decline could be a tailwind to some companies’ earnings. “The dollar lost some of its luster as the only game in town,” said Kathy Jones, chief fixed income strategist at Charles Schwab. But it’s possible that a second hike never comes and the Fed decides to move on to the next phase of its inflation fight - keeping rates steady until inflation moderates to its 2% target.Īs the central bank gets closer to possibly finishing its hiking cycle and other central banks around the world that began raising rates after the Fed catch up, the greenback is nearing a more sustainable level, some experts say. The Fed on Wednesday raised interest rates by a quarter point and hinted at another hike later this year. Last week, that helped lead the US Dollar Index, which tracks the dollar versus the British pound, euro, Swiss franc, Japanese yen, Canadian dollar and Swedish krona, to its lowest level in more than a year. Now, as inflation continues to cool, the Federal Reserve appears to be nearing the end of its rate-hiking cycle. ![]() But then came recession fears, the collapse of three regional banks and worries about congressional infighting and US spending. The greenback soared to a two-decade high last September, driven by the Fed’s aggressive pace of interest hikes. The US dollar’s decline has gained speed this month as investors pare back their interest rate expectations. ![]()
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