Foreign-exchange expert Douglas Borthwick say the U.S. dollar might plunge another 20% in the second half, as he believes the Trump administration wants a weaker greenback that will benefit U.S. trade.
"We've got another 20% to go before I feel satisfied that the U.S. has reached that weaker-dollar policy," Borthwick, who writes about forex for TheStreet, said during our latest Trading Strategies roundtable for investors.
Borthwick, managing director of Chapdelaine FX, said that the dollar will have to fall lower for longer to help fulfill the Trump administration's stated goals of improving U.S. manufacturing.
He said the U.S. Dollar Index (^DXY) is lower than it was before Donald Trump's election, "but it's still not low enough. The weaker-dollar policy that the Trump administration is pursuing is based on making the U.S. competitive -- and it has to be competitive not just for a couple of months where the dollar is weak, but for the next four to eight years."
A declining U.S. dollar could boost sectors besides manufacturing, such as commodities, which are generally denominated in dollars. The dollar has been on a downward move since January compared to a basket of major currencies. The greenback is now at at its lowest point since September 2016, according to the Federal Reserve Bank of St. Louis.
President Trump has divided from his administration on dollar policy. Though Treasury Secretary Steve Mnuchin has said a strong dollar is good for the U.S. economy, Trump has said he prefers a weak dollar because that benefits manufacturing.
How to Play 2017's Second Half
Our July Trading Strategies roundtable and accompanying special report highlights lots of ways to invest over the next six months. Click below to check out:
- Fisher Investments' William Glaser, Look Beyond America's Borders in the Second Half
- Video anchor Scott Gamm,This Is Your Investing Playbook for 2017's Second Half
- Real Money Pro columnist Bret Jensen, Why I Hate the FAANGs (but Like Banks and Biotech) for 2017's Second Half
- Stocks columnist Stephen "Sarge" Guilfoyle,Disney, Nvidia, Wal-Mart and 12 Other Stocks I Like for 2017's Second
- Fixed-income expert Peter Tchir,10 Investments I Like for a Risk-Filled Second Half
- Gold columnist David Yoe Williams, These 3 Majors Areas of Concern Should Frighten Stock Market Bulls
- Foreign-exchange columnist Douglas Borthwick, Why the U.S. Dollar Will Only Drop More in 2017's Second Half
- Staff reporter Anders Keitz, Stocks Could Rise 'Substantially' in Coming Months, Nobel-Winning Economist Robert Shiller Says