Mid-sized U.S. manufacturers, are likely to bear the brunt of the dollar’s climb that has lifted it nearly 10 percent against the euro and 7 percent against major currencies since mid-December. Foreign exchange strategists polled by Reuters shortly after the euro hit an 11-year low of $1.11 on Jan 26 cited a nearly one-in-three chance the euro would hit parity or lower in the coming year.
Multinational giants with operations around the world are less vulnerable because they have costs in local currencies that act as de-facto currency hedges. But small and medium-sized U.S. firms, which account for about a third of U.S. exports, worry that the strong dollar will make their goods more expensive in foreign markets and less competitive at home.
While most major currencies, including the yen and the pound, have been weakening against the dollar over the past months, the euro tumbled the most in recent weeks, a boon for manufacturers in Germany and beyond.
via Reuters
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Alfonso Esparza