US : Dollar’s strength also a danger to manufacturing - CIBC
Analysts at CIBC, point out that the US Dollar on a wide perspective, measured by different indexes is stronger than prior peaks over the last five years, helping to slow exports and manufacturing.
Key Quotes:
“The slump in the ISM last week was accompanied by headlines that the trade war was hurting the US manufacturing sector. And while that’s true, manufacturing is also being impacted by the sheer strength of the US$, which is itself only partly a side effect of tariffs. On its broadest measure, the greenback is stronger than peaks reached earlier in the cycle, which on the first occasion in late 2015 also correlated with weak ISM readings. This time around, the added trade uncertainty has meant even further downside in export orders.”
“So even if trade uncertainties fade, the US$ will also need to be broadly weaker to expect stronger manufacturing and export growth.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
