AAA  Jul. 11, 2014
Mid-year FX review
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How's the dollar doing? It depends.

The dollar has shed some value against the British pound and Japanese yen this year, among other foreign currencies. But it has inched higher against the euro and remained nearly flat against the Swiss franc.

That mixed performance will be reflected in the second-quarter results of U.S. companies as earnings season picks up momentum. The dollar's decline against the British pound, for example, benefits U.S. companies because sales made in pounds are now worth more when converted into dollars than a year ago. The opposite occurs when the dollar rises against another currency: It can hurt U.S. companies and the swings can be large.

In the second quarter, changes in the value of the dollar were so split that Charles Peters, chief financial officer of the software company Red Hat, told investors that "for the first time in a long time, changes in foreign exchange rates have had minimal impact on our results."

The dollar's moves in the first half of 2014 ran counter to many analysts' predictions at the start of the year, which called for the dollar to rise. A harsh winter, kept shoppers out of stores and sent the economy to its worst quarterly perfor- mance since the recession, which held back the dollar.

But economists say the U.S. has since bounced back and the Federal Reserve continues to ease up on the accelerator of its fiscal stimulus, leading many analysts to expect the dollar to strengthen.

Associated Press
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