The Greenback Comes Back

Things are looking up for George Washington, as the dollar has staged a solid comeback after losing nearly 10% in 2017 and an additional 4% in January. Since its February lows, the U.S. Dollar Index has rallied more than 5%. This comeback is notable since the dollar has a significant impact on international trade and U.S. corporations’ overseas profits.

Given then dollar’s recent strength, what may lie ahead?

LPL Research Chief Investment Strategist John Lynch explains, “The dollar may continue its run in the near term, driven by rising U.S. interest rates, weaker than expected economic data abroad, and repatriation of overseas cash, as our LPL Chart of the Day shows. However, we are mindful that longer-term structural forces, including U.S. current account and budget deficits, may limit dollar gains and eventually lead to a resumption of the dollar’s long-term downtrend.”

Please see our Weekly Economic Commentary for more on dollar drivers and our outlook.


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