The following is an excerpt from Jeff Reeves | January 7, 2017 | MarketWatch.com |
In December, the Federal Reserve raised interest rates for the second time since the Great Recession and added the expectation of a 2017 interest-rate hike to its forecast. And just a few days ago, the much-awaited minutes from the latest Fed meeting showed the most hawkish tone from the central bank in two years.
At the same time, Europe has been plunged into political turmoil after last year’s Brexit vote and the more recent resignation of Italy’s prime minister. Elsewhere, the Bank of Japan continues down the path of negative rates and aggressive bond buying.
Add it all up, and it isn’t surprising that the U.S. Dollar Index DXY, +0.79% is up against 14-year highs.
Investors may have missed all this talk thanks to chatter about the Dow Jones Industrial Average DJIA, +0.32% once again nearly hitting 20,000. But regardless of your allocation to stocks or your investment horizon, this kind of big-picture trend in the dollar means now is the time to position your portfolio to profit — and, perhaps most important, to avoid some of the pitfalls that can come from a strong domestic currency.
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