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RANsquawk 12th February Morning Briefing - Stocks, Bonds, FX etc.
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Question: How do U.S. exporters have benefited from the Dollar Index below 80 in the third and fourth quarters, and how it impacted the results of the American manufacturing sector?
Question: How the Dollar Index above 80 again will impact U.S. exports, and hence the manufacturing sector in 2010?
Good questions, answer (IMHO): somewhat--for the sector, but not significantly for the overall economy.
My reasoning: the US manufacturing sector is a relatively small portion of the economy now. Dollar strength (or weakness) can affect individual companies results more than the entire economy. (OT, the administration plan to double US exports is pure fantasy--unless the dollar is devalued by decree.)
I think that a larger effect of a weaker or stronger dollar may be on inflation via its effect of the cost of imported goods. (However, this is moderated since the yuan is pegged to the dollar.)
Oddly enough, I think the exchange rate has its biggest effect on investors! The US market seems to move in lock step with (inverse) the currency and obviously value of int'l investments are affected.
hat tip to: http://www.iamned.com
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