Strong Dollar Won't Hurt U.S. Economy
|How will the U.S. economy, particularly exports, cope with a rising dollar? Pretty well, we should expect. Even though a strong dollar will create drag for U.S. companies geared to selling abroad, there are reasons to doubt that it will slow the steady trek higher this summer that I’ve projected for U.S. stocks. For one, investors have been discounting a strengthening dollar all along, and it is already baked in the cake. And for two, it will rev up domestic consumption of imports. Granted, the lion’s share of the proceeds will go back to Canada, Europe and Asia. But U.S. vendors — of everything from cars to anchovies — will take their cut, and that should be sufficient to provide a net boost to an economy that has continued to chug along. Incidentally, my target projection for the Dollar Index, currently trading for around 94.04, is 96.43 — a pretty big move percentage-wise. This is corroborated by a technical pattern I’ve flagged to subscribers on the Rick’s Picks home page tonight. There is an unusually good trading opportunity in the offing, but without going into the details, it makes me even more confident about the dollar’s continued rise.
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