Dollar at record strength against other major currencies.
The Euro hit a price of $1.09 compared to the dollar, its weakest performance against the U.S. currency since May 2017. As Europe shows even slower growth than the United States, the U.S. dollar will continue to look like a haven for currency investors.
Currency moves are binary in nature. A weak Euro means that the dollar looks relatively stronger. This is a situation that can have severe implications on trade issues.
The weak Euro makes Eurozone goods more competitive on global markets relative to U.S. goods. While currencies tend to fluctuate between periods of strength and weakness, the relative economic strength of the U.S. to other industrialized nations right now portends for the current strength of the dollar to continue, and for U.S. interest rates to remain higher than those of weaker economies around the world.
Action to take:Investors looking at international investments may want to scale back and have more money in dollar-denominated assets, where a strengthening dollar can lead to bigger returns on a currency-adjusted basis. While Eurozone goods may look cheaper, and therefore potentially a better investment, the weaker fundamentals in the Eurozone spell more danger for European stocks compared to American stocks at this time.
Currency traders should look to go long the dollar and short currencies like the Euro for the foreseeable future.