US stocks haven’t been the only beneficiary of signs the US economy is recovering, albeit slowly. The US dollar has rallied recently too.
It’s no wonder, then, that I’m getting lots of questions from investors about the outlook for the greenback going forward and how this could impact other investments like commodities.
In the seventh of my ongoing series of posts dedicated to questions I receive, I’ve compiled some of these currency and commodity-related queries, along with my answers. If you have an investing-related question you’d like me to answer, please post it in the comments section below. Also, you can check out earlier installments here.
Q: What currencies to do you think will change in value (increase relative to the US dollar) in the near future and why?
A: I actually expect an even stronger dollar in the coming months. While most central banks are still firmly in an easing mode, the Federal Reserve is likely to be the first major central bank to remove monetary accommodation. Though the end of Fed easy money will likely happen slowly and not until later this year at the earliest, it should help strengthen the dollar further relative to most other currencies (with the exception of the Chinese Yuan, which is pegged to the dollar).