4 Stocks To Buy On The Dollar’s Surge

The U.S. dollar posted a third week of gains on Friday, close to its highest level in two months. Gains were primarily attributable to higher chances of a Fed rate hike in June. Despite the decline versus the yen experienced on Monday, the greenback’s rise is expected to continue in the days ahead.

Companies which primarily conduct their business within the U.S. are expected to gain from the dollar’s surge. A widely expected rebound in U.S. GDP will also give such stocks an added impetus. Adding such stocks to your portfolio makes good sense at this time.

Dollar Rises on Possible Rate Hike

The dollar registered its third successive weekly gain on Thursday, increasing 0.8% over last week. Minutes of the Fed’s most recent policy meeting and last week’s comments from Fed officials have led to the increasing feeling that a rate hike is likely to occur in June. Moreover, New York Fed President William Dudley said he is “quite pleased” to see strong possibilities of a rate hike in June-July. He added that if he sees that his own forecast “is sort of on track” then he thinks that “a tightening in the summer, the June-July time frame is a reasonable expectation.”

Richmond Fed President Jeffrey Lacker also showed support for a June rate hike. Earlier last week, San Francisco Fed President John Williams said that following continuing moderate growth, two to three rate hikes this year “makes sense.” Atlanta Fed President Dennis Lockhart said recent “encouraging” inflation data indicated growth in the U.S. economy.

Improving Indicators Hint at GDP Rebound

A data dependent Fed has indicated that a pickup in growth in the second quarter would lead them to hiking rates in June. Most reports released in May seem to indicate this is indeed the case. Retail sales rose 1.3% last month, reaching its highest level since Mar 2015. Industrial production rebounded from a 0.9% decline in March to rise by 0.7% in April, posting its highest percentage increase since Nov 2014.