CNBC’s Jim Cramer credited the falling U.S. dollar with helping stocks close higher on Tuesday.
“It’s time to recognize that the dollar is in the driver’s seat. Today, at least, the dollar’s rally has paused, which means the bears have paused as well. If the greenback continues to pull back, may -maybe they will go into hibernation,” he said. said.
Stocks gained on Tuesday for a third straight trading session, buoyed in part by lower bond yields and a weaker dollar.
The value of the US dollar has surged in recent months, boosted by the Federal Reserve’s interest rate hike campaign and the strength of the US economy.
The strong dollar has hurt companies doing business abroad, as their balance sheets are subject to unfavorable exchange rates.
At the same time, “bond yields reflect whether Wall Street expects more pain from the Fed, which is why it’s so good when those two things go down,” Cramer explained.
He added that the dollar was expected to fall, according to chart analysis by Carley Garner of DeCarley Trading. And while the central bank may seek to moderate increases in December, according to a Wall Street Journal report, it remains unclear whether the market’s recent strength will continue, Cramer said.
“The market needs time to adjust, and the Fed doesn’t want to rock the boat too aggressively just before the [midterm] elections,” he said.