US dollar is getting stronger

The US dollar index (UUP) is getting stronger day by day. It rose nearly 4.4% between November 8, 2016, and December 30, 2016. Currently, it’s trading at $100.82. The dollar index hit a 12-month high on expectations for increased economic growth in the US.

Goldman Sachs: Is Strong Dollar Creating Investment Opportunities?

The PowerShares DB US Dollar Bullish ETF (UUP), which tracks the performance of the US dollar index, rose nearly 4.4% between November 8, 2016, and December 30, 2016. UUP hit a one-year low of $23.96 on May 2, 2016. It rose nearly 10.4% between May 2, 2016, and December 30, 2016.

The US economy and dollar index

The rise in the dollar index indicates that the US economy (QQQ) (SPY) is gaining strength and confidence is improving. However, a stronger dollar always hampers the country’s exports. Market participants and investors are expecting that Trump’s proposed economic policies will be good for the US economy (VFINX) (IWM). They are also expecting that less regulation will be good for businesses. This sentiment is driving the movement of the US dollar index.

In the currency market, the dollar index is leading. According to Goldman Sachs (GS), if Donald Trump introduces his infrastructure investment plan, then the dollar index may rise more. A rising dollar is a positive sign for the US economy. This positive sentiment will bring investment into US markets.

In the next part of this series, we’ll analyze Goldman Sachs’s view on the US wage growth.

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