The Federal Reserve has raised its benchmark interest rate by three percentage points so far this year. As the economists at Charles Schwab report, rising interest rates translate into a strengthening US dollar, likely adding to global economic pressure and weighing on corporate earnings.
Companies could face a tough start to next year
“An excessively strong dollar can cause an earnings recessionespecially as the macroeconomic backdrop is overshadowed by the Fed’s aggressive policy tightening, consumer and business pessimism, and a significant slowdown in leading economic indicators.”
“The strength of the dollar is likely to weigh on earnings. Foreign exchange difficulties often take time to fully translate into weakening earnings. That means companies could be off to a rocky start next year.”
Source: Fx Street
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