Since its close on November 25th, the US Dollar Index is up 3.09%. This is a pretty big move in the currency market, and it has been an important move because it has broken the long-term downtrend that the Dollar has been in over the last six months. As shown in the chart below, prior rallies over the last six months have been short lived. Anytime the index bumped up against the top of its downtrend channel, it quickly reversed and headed lower. This time around, however, the Dollar was able to break through the top of its downtrend channel, and this resistance will now act as support.
Here at Bespoke we constantly monitor the Dollar's impact on stocks. We've highlighted numerous times how companies that generate the bulk of their revenues outside of the US (which benefit from a declining Dollar) have outperformed companies that generate all of their revenues domestically as the Dollar has declined. Our database that shows the geographic breakdown of revenues for all Russell 1,000 stocks is one of the more popular products in our Bespoke Premium package. If the Dollar continues to rally, we should see a shift in outperformance from the "international revenue" companies to the "domestic revenue" companies. Subscribe to Bespoke Premium today to access our International Revenue database.