Strong dollar may slam the brakes on Ford's rally
New York (Nov 21) The surge in the U.S. dollar this month to an almost seven-year high versus the yen is very bad news for Ford investors, if past history is any guide.
In the six months following a 5 percent or greater surge in the dollar-yen, Ford shares were negative almost 80 percent of the time with a median return of negative 9 percent, according to analysis by CNBC.com using Kensho, a quantitative analytics tool.
One could reason that when the dollar strengthens by this magnitude, it raises the relative prices of Ford vehicles in the international marketplace compared to Toyota and others.
However, somebody better tell those investors who have bid up Ford shares by almost 11 percent this month. Especially since the dollar-yen rally in November stands at greater than 7 percent and counting.
The dollar is surging amid signs of an improving labor market, a stronger economy and stable-to-rising consumer prices. Also, nothing in the Federal Reserve meeting minutes released Thursday indicated that the central bank would not be on a course to raise interest rates sometime next year.