Money Manager Katzman: US Dollar 'Is Not Cheap Anymore'

Thursday, 04 Sep 2014 12:33 PM

By Dan Weil

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The dollar has soared in recent weeks amid concern the Federal Reserve will raise interest rates sooner than expected and fear over military conflicts in the Mideast and Ukraine.

But not everyone is convinced that the greenback will extend its gains.

The dollar "is not cheap anymore," Sam Katzman, chief investment officer with Constellation Wealth Advisors, told The Wall Street Journal.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

Meanwhile, the euro hit fresh 14-month lows against the U.S. dollar and nearly two-year lows against the Swiss franc on Thursday after the European Central Bank cut interest rates and said it would launch an asset purchase program to ward off deflation.

The euro sank to $1.2997 against the U.S. dollar, marking the first time the shared currency broke below $1.3000, a key technical resistance point, in 14 months. Against the Swiss franc, the euro fell to 1.20450 on the EBS platform, its lowest since November 2012.

The U.S. dollar rose broadly against major currencies, despite weaker-than-expected U.S. jobs data. The dollar was up 0.22 percent against the Japanese yen at 105.02 yen, and was up 1.02 percent against the Swiss franc at 0.9268 franc.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was last up 0.65 percent at 83.405.

Sustained strength by the dollar would hurt U.S. companies' exports. And that could lead investors to shy away from U.S. stocks, depressing the dollar, he explains.

"When you have a stock market that's not cheap, and you get some currency headwinds going against you," stock investors and companies may shift their investment focus overseas from the United States, Katzman notes.

But some currency market participants remain bullish on the greenback. "In the U.S., across the board we have had strong [economic] data," Niels Christensen, chief currency strategist at Nordea Bank in Copenhagen, tells Bloomberg.

For example, GDP expanded 4.2 percent in the second quarter.

"That will keep growth momentum going. We have had a positive dollar trend for the past two months. I find it difficult to see this trend is going to disappear in the short term," he states.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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