Should you be worried about the rising U.S. Dollar?
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”.
Get my book!
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!
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.