U.S. Dollar At 12 Year High Against Euro; Impact on Corporate Earnings A Growing Concern

dollarThe U.S. dollar is at a 12 year high against the euro in the midst of a diverging monetary policy environment with the European Central Bank (ECB) engaging in greater monetary easing and stimulus while the U.S. Federal Reserve is moving in the opposite direction as it prepares for an interest rate hike this year, likely in June or September.

U.S. stock markets have moved higher at the open this morning following yesterday’s steep decline that saw the Dow dropping over 300 points as investors remain cautious about the impact of a strong U.S. dollar on corporate earning results in the months ahead with weaker demand forecasted for U.S. exports due to a strong dollar and a U.S. Central Bank that is preparing to normalize interest rates from current historic lows with the federal funds rate.

St. Louis Fed President James Bullard said in a recent interview with the Financial Times that the time is right for the Federal Reserve to begin hiking rates.

“I think we have to move now or soon, in order to be in the right position as the economy continues to evolve” Bullard said.

Today there is little U.S. economic data released but tomorrow will see retail sales results for February.

Retail sales for February is expected to rise 0.0 percent, according to briefing.com.

January saw retail sales slide -0.8 percent.

Initial jobless claims will be reported tomorrow as well.

-Johnathan Schweitzer

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