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Is there a threshold for any US Dollar decline that would be a catalyst to sell US stocks?

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Question asked 10/05/2025

Is there a threshold for any US Dollar decline that would be a catalyst to sell US stocks?

Greetings and many thanks to your valuable insights that help guide me in my investments. I look forward to your daily emails. I am expecting that the US Dollar will decline through 2025 and therefore thinking when some profits might be taken. Is there a threshold for a potential US Dollar decline that would be a catalyst for MM to sell US stocks? What is your view in this matter? Thank you and kind regards, Bob

Answer

Hi Bob,

Like yourself we are medium term $US bears, looking for the $A to trade toward the 70c area. We don’t hedge our US holdings, taking the good with the bad on the currency front. While a move towards 70c represents a 8-10% fall in the value of US assets its akin to saying avoid gold as its denominated in $US, but as we know that would have proven a big miss over the last few years.

A weak $US can often be bullish the S&P 500 as it makes US companies exports more competitive so it can be a two edged sword. We would rather evaluate individual companies on their current/future earnings potential letting the currency look after itself – specific moves in the $US are more along “Shawn’s Trading Ideas” alley.

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Australian Dollar (AUDUSD)

LAST UPDATED 09/05/2025 15:49

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