Dollar Rallies Precede Fed Tightening Cycles: Chart of the Day
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History’s message to currency investors is buy the dollar six to nine months before the Federal Reserve starts raising interest rates.
The CHART OF THE DAY shows the U.S. Dollar Index climbed about 7 percent during periods six to nine months before the start of the previous three central-bank tightenings started in February 1994, June 1999, and June 2004. The greenback appreciation tends to fizzle and the performances became mixed after the first actual increase in the Fed’s target for the federal funds rate.