Loree is not alone. He joins a chorus of executives warning of more pain ahead for corporations with large overseas customer bases. Companies from Pfizer Inc. to DowDuPont Inc. and McDonald’s Corp. have already warned about the ripple effects of a strong dollar in 2019 -- particularly in the first half of the year.
This comes amid a backdrop of global uncertainty on the U.S.-China trade war, Brexit and fears of a potential worldwide economic slowdown that’s making the task of currency forecasts trickier for corporate treasurers. A slumping dollar in 2019 became a popular market call for many Wall Street strategists at the end of last year, and last week’s dovish message from the Federal Reserve has bolstered the case to some degree. However, it’s far from guaranteed. HSBC strategists, including Maher, believe the dollar “is still placed to strengthen in most scenarios,” according to a Jan. 31 note.
Last year’s off-target forecasts for a weaker dollar are casting suspicion on Wall Street’s prediction that the currency will weaken by almost 5 percent by the end of 2019, according to the Bloomberg median forecast. Either way, major corporations may have learned enough from this year to take precautions.
“With companies suggesting the headwinds will continue, that would marginally suggest that they are maybe better prepared now for dollar strength if that’s what we get,”said Adam Cole, chief currency strategist at Royal Bank of Canada in London, who believes the dollar will strengthen.
This article provided by Bloomberg News.