Is the dollar strength positive or negative for consumer staples?

Overall, third-quarter earnings season for the consumer staples sector has remained largely underwhelming, consistent with its recent past. But several management teams have backed away from their bearish stance and begun to speak constructively about the US for the first time since the financial crisis. The strengthening dollar has been a double-edged sword for many consumer staples companies in the quarter, though. Many of them took a 5-7% haircut to reported earnings because of currency translation, and based on recent spot prices, they may take another 5% hit next year. There is potential upside, however: A stronger US dollar usually means declining commodity prices, which are a positive for the group.

David Sealy, The Boston Company


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