The US Dollar has lost some of its strength against the Japanese Yen (JPY) in the FX market. Based on this development, some analysts believe that large-cap stocks from the USA could get a boost. The reason behind Yen's strength was the BOJ's new policy about the country's bond market.
In fact, the boost in the Yen's value during the last 2 months was one of its biggest double-digit gains since 2008. It doesn't matter how you look at it; a move like this by the Yen against the USD means that the US Dollar has turned weaker. This could end up providing support for the S&P 500 index.
If we look at the poor performance of the S&P 500 index during 2022, one of the main causes leading to this was the strength of the USD. But now that the USD has lost some ground against the JPY, there is hope once again for the US stock market.
The US companies which have a multinational presence will also benefit immensely from the recent dollar weakness. In some words, it will help US companies to sell their products at a lower rate. In addition, the international sales value will also increase on the back of dollar weakness.
According to research, around 40% revenue of the companies listed on the S&P 500 index was made outside of the USA. So a drop in the dollar strength will also end up improving their revenue.
For the year 2022, USD is still up by around 14% against the JPY, but it has lost close to 14% during the last few months. So for the short and medium-term, the strength of the USD against the JPY and other currencies has faded away.
Experts believe that there were only a few occasions when the USD lost against other currencies like this... Even if we go as far back as 1972, there are only limited occasions like this.
Although this may not be good for the US Dollar, it is very good news for US stocks and especially those listed on the S&P 500.