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Wall Street expects a continuation of the weaker US dollar

Wall Street expects a continuation of the weaker US dollar


Recent weeks have shown a correlation between the weakening dollar and rising Wall Street, hoping investors will continue for some time.


After a disastrous start to the year, the Dow and the Standard & Poor's 500 have just move into positive territory since 1 January, partly on the feeling that the declining US dollar seen for three weeks will have a positive effect on corporate profits.

The greenback was strengthened by more than 2% against a basket of major currencies between mid-September and mid-February, in response to the beginning of a rise in interest rates when the Federal Reserve Bank of Japan and the European Central Bank on the contrary amplified their accommodating monetary policies.

But fell more than 3% over the past three weeks in anticipation of a pause from the Fed, which has effectively halved on Wednesday its rate hikes this year projections.

With the dollar's decline, the S & P 500 has returned about 9% since its low of February 11 and up 0.44% on Friday hoisted into positive territory for the year, with a gain of 0.28 % since 1 January.

The weak dollar supported the oil prices which retook the 40 US dollars for the first time in 2016, which boosted the energy values ​​on Wall Street.

The greenback was trading at around 1.1270 per euro and 111.50 yen Friday, down 3.8% and 7.4% since the beginning of the year.

shortened week
In the absence of corporate earnings, investors' attention will be focused on the economic indicators and their potential impact on the exchange rate.

The week will be cut short, however, with the stock market will be closed Friday for the Good Friday and will therefore react to final figures from the fourth quarter growth published that day.

Monday and Wednesday will be published sales figures in real estate in February and the market will take note Thursday durable goods orders in the same month, in addition to the weekly statistics on initial jobless claims.

Quincy Krosby, Prudential Financial analyst in Newark (New Jersey), also hoped that new regional surveys from the Fed, such as Richmond, will confirm the improvement of conditions in the manufacturing sector which reported investigations published these days for the regions of New York and Philadelphia.

"We feel that the manufacturing sector has bottomed but we want to ensure that it is general throughout the country," she explains.

Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, however, warns that the long dollar trend remains tied to the rate differentials between the US, the eurozone and Japan.

"After the visceral reaction we had in reaction to the release of monetary policy, I would expect the greenback to resume its upward movement," he said. "Our rate managers are in a sense, their will in the other and no matter what the differences will expand."

On the business side, Apple, the world's market capitalization, will make a presentation Monday at its headquarters in Cupertino, California. Analysts expect the firm at the apple in particular reveals a smaller and cheaper iPhone for emerging markets.

Tuesday is Nike will be expected to publish the results of the third quarter of fiscal offset.

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Master of Economics, University of Harvard, worked as an analyst in a few large companies and specializes in many countries. Currently owned by a large company that conducts assessment of investment attractiveness in the various countries of the world.