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Why the Strong Dollar Won’t Pack the Same Profits Punch
Attachment 19543
The euro shouldn’t be kicking around U.S. companies’ earnings any more.
It caught fire on Thursday, jumping 1.8% against the dollar after the European Central Bank announced a fresh round of stimulus measures while playing down the potential for more rate cuts. That caught traders who had forecast a widening divergence between ECB and Federal Reserve policies off guard, making for a violent swing.
Attachment 19544
For equity investors, however, what happened to the euro last week matters less than what happened to it about a year ago. That was when its sharp decline, which had started in mid-2014, finally abated. Indeed, as of Friday the euro was up 6.2% from a year earlier.
Attachment 19545
The euro matters far more for U.S. multinationals than the overall economy. While the currency area counts for just 15% of U.S. exports, Commerce Department figures show that as of 2013 euro-area operations account for about 40% of the sales of majority-owned affiliates of U.S. multinationals abroad. Japan, by contrast, accounted for about 4% of those sales.
the source
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Strong us dollar boosts regional tourism
4% rise in international visitor numbers in Americas in first half of 2016
Attachment 24669
The UNWTO World Tourism Barometer reports that international arrivals in the Americas increased by 4% in the first half of 2016, led by Central America and South America. Europe (+3%) showed mixed results, with solid growth in many destinations offset by weaker performance in others.
“Tourism has proven to be one of the most resilient economic sectors worldwide,” said UNWTO Secretary-General, Taleb Rifai. “It is creating jobs for millions, at a time when providing perspectives for a better future to people of all regions is one of our biggest challenges. But tourism is also creating bonds among people of all nations and backgrounds, bringing down stereotypes and ghting fear and distrust.”
the source
US Dollar Outlook Bullish on FOMC as Virus-Induced Recession Risks Swell
Overnight index swaps are not pricing in a rate cut at the upcoming FOMC meeting on April 29, though the subsequent press briefing and commentary therein may induce cross-asset volatility. The US Dollar may rise if Fed Chairman Jerome Powell paints a worrisome picture for global growth in light of the coronavirus pandemic as the central banks pumps trillions of dollars of liquidity into the financial system.
At the time of writing, the Fed’s balance sheet stands over $6.6 trillion. In an attempt to calm inter-bank stress, monetary authorities also announced a temporary suspension on limits of uncollateralized intraday credit exchanges. However, the most controversial measure – arguably – that the Fed has done is agree to purchase junk-rated bonds as part of its broader asset-purchasing policy measure.
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US Dollar Outlook: Weekly Breakdown
Attachment 39666
- Scope for further declines in the US Dollar could narrow
- Markets were reminded of volatility risk as S&P 500 sank
- Key risks: retail sales, Powell, virus wave, balance sheet
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US Dollar Ripe for Reversal: GDP, Fed, Earnings Raise Volatility Risk
The US Dollar may bottom out in a jam-packed week of event risk that could rekindle market volatility. All eyes are on the Fed, US GDP, the earnings season and more fiscal stimulus.
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EUR/USD: bullish ranging with 1.1919 key resistance level
Attachment 41056
With the markets focused on coronavirus vaccines, it was easy to miss news last week that Poland and Hungary have blocked the EU’s recovery fund; another potential negative for the Euro.
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2 Attachment(s)
Markets Week Ahead: Russell 2000, S&P 500, Gold, and USD
Attachment 41533
Attachment 41534
The S&P 500 declined as the Russell 2000 soared as markets digested Joe Biden’s fiscal package. Gold prices sank as the US Dollar shined. The week ahead is fairly busy, with bank and tech earnings,...
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