The USD has been appreciating against a basket of foreign currencies as global central banks enact loose monetary policies to depreciate their local currencies. The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) has increased 4.6% year-to-date and gained 14.9% over the past year. Some analysts argue that the stronger dollar environment would be more favorable for consumer sectors. [USD ETF Advances in Ongoing Currency War]
“Consumer-oriented companies are likely to see better earnings results. So far we’ve only heard from banks and wholesale firms,” Jack Ablin, chief investment officer at BMO Private Bank, said in the article.
Many argue that small-cap earnings that do business at home will benefit from the continued U.S. economic expansion. In contrast, earnings results from large companies like Microsoft (NasdaqGS: MSFT), Procter & Gamble (NYSE: PG) and Pfizer (NYSE PFE) have revealed that sales are taking a dive due to the appreciating U.S. dollar. [Strong U.S. Dollar Could Pressure S&P 500 Earnings, ETFs]
For more information on the consumer sector, visit our consumer staples category.
Max Chen contributed to this article.