Investors and companies should continue eyeing the dollar, despite its most recent slide against major currencies, BlackRock’s Russ Koesterich said Friday.
“This is a pause for the dollar. The reality is you’ve seen some positive surprises out of Europe, but we still believe this is a year where the U.S. will significantly outgrow Europe and we’ll have a divergence in monetary policy between the U.S. and virtually every other central bank that will allow that dollar to continue,” Koesterich said on CNBC’s “Squawk on the Street.”
Koesterich made his remarks during early morning trading, as U.S. equities soared nearly 1 percent on higher WTI prices and a weaker dollar across the board. U.S. crude was up nearly 4 percent, while the dollar index was down more than 1 percent. The euro also gained ground against the greenback, rising about 1.2 percent to $ 1.0785.
On Wednesday, the dollar gave back most of its gains against a basket of currencies following a much more dovish-than-expected statement from the Federal Reserve on raising interest rates.
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Koesterich also said, however, that stocks could continue to rise despite the strong dollar, but not without volatility. “We do think stock could go higher, but it’s going to be accompanied by more volatility, and if the dollar strengthens too much too fast, that is going to create a real headwind for U.S. companies.”
Several companies, including Tiffany, have said they’ve been negatively affected by the strong dollar. The jeweler reported its first sales decline in about five years amid the rising greenback.