You won’t see it making headlines, but the U.S. dollar has been incredibly strong!
Especially when compared with other currencies like the euro, British pound, Japanese yen and even the Chinese yuan.
Take a look at the U.S. dollar index below:
The strong dollar creates some very interesting dynamics when it comes to global trade. It also creates some great opportunities for U.S. travelers.
Best of all, the strong dollar can lead to some great investment profits if you know where to look.
Invest “At Home” With American Stocks
When the U.S. dollar is strong, it makes American products very expensive for overseas customers.
Just put yourself in the shoes of a European company looking to buy American goods.
If the euro is weak, it will take a lot more euros to buy products. In many cases European companies are now paying significantly more euros for the same amount of American goods or services.
These overseas companies (and consumers) have an incentive to try to source the same goods or services locally and avoid having to exchange weak euros for stronger dollars.
So U.S. companies that export to international customers are at a disadvantage.
However, domestic companies that do most of their business here in the U.S. are in much better shape.
And companies that produce goods and services overseas — and sell those goods and services to the U.S. are even more competitive!
So stocks of local regional banks, U.S. homebuilders, and even domestic energy companies should continue to benefit from the dollar’s strength.
Enjoy a Larger Travel Budget!
Another benefit of the strong U.S. dollar is the value you get when traveling overseas.
Depending on where you go, your spending allowance can increase by 10% or more simply due to changes in currency rates.
That’s great news if you’re planning a vacation to Europe.
And it’s also great news for airline and international hotel stocks. Because as more U.S. travelers take advantage of the strong dollar, profits for these travel companies should grow.
I’ve got my eye on airline stocks like American Airlines (AAL) which offers a full schedule of international flights.
And hotel stocks like Marriott International (MAR) should also benefit from rising global travel.
Travel booking sites like Expedia Group (EXPE) are also beneficiaries of a strong U.S. dollar.
[Editor’s Note: I currently have a bullish EXPE play in my Speculative Trading Program. This program includes my most aggressive trades and it’s where I put my own family’s money to work.]
Whether you’re traveling or investing, make sure you pay attention to the U.S. dollar strength.
Being on the right side of this trend could make a big difference for your investment success!
Here’s to growing and protecting your wealth,
Zach
