Where the Dollar Goes From Here
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Companies are blaming disappointing earnings on a strong dollar. This pro says they can breathe easier in the fourth quarter.
It's shaping up to be a lackluster earnings season — at best. And many companies are blaming their lower than expected results on a strong dollar, which makes exports more problematic because U.S. goods become relatively expensive.
Paul Richards, head of FX distribution Americas at UBS , says the pain won't last.
Three months ago, the euro was trading at 1.2000, he told CNBC's Simon Hobbs. But in the wake of the European Central Bank's announcement of a bond buying program, "we're now seeing it closer to 1.3000." That means the dollar has depreciated eight percent against the euro, and with the euro "at 1.3000, exporters are absolutely breathing a sigh of relief."
That said, the dollar could rise against other currencies, notably the yen, Richards says.
"The one country that I think now has a true policy of easing is Japan," he says. He expects the Bank of Japan to ease at its upcoming meeting, he adds, "so I would definitely be buying the dollar against the yen."
Richards wants to enter the trade at 79.45 with a stop at 78.50 and a target of 82.00.
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