Market Update: Inflation and U.S. dollar set to move (up or down)?

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This week in the stock market

  • Trade tensions continue between the U.S. and China.
  • The U.S. walked away from negotiations with North Korea, canceling what would have been a historic diplomatic summit.
  • The value of the U.S. dollar increased against the majority of currencies, excluding some ==safe-haven currencies==.
  • The ==Fed released the minutes from its May meeting==, which highlighted a potential increase in inflation along with some concerns regarding trade tensions.
  • U.S. stocks were slightly higher at closing mid-week after the Fed’s release, then down again on Thursday possibly due to trade concerns and the North Korea summit cancellation.

The U.S. dollar increases strength

The terms “weak” and “strong” dollar refer to the relative value of the U.S. dollar compared with the values of other currencies. A strengthening U.S. dollar buys more of a foreign currency than it did before.

The ICE U.S. dollar Index (DXY) is one indicator of how strong the U.S. dollar is compared to six other currencies. On Wednesday, the DXY hit a new high for 2018, closing at +0.4% for the day and +1.77% for the year. This may be good news if you’re planning on traveling abroad, because your dollar can potentially now buy more goods in the other country.

What a strong U.S. dollar means for MoneyLion Plus members

When the dollar is strong, U.S. stocks tend to outshine international ones. When it’s weak, international stocks tend to surpass U.S. ones. As a MoneyLion Plus member, your portfolio is invested in both U.S. and international equities and bonds. We believe it’s important to provide Plus investors global exposure in order to help weather global currency fluctuations that can impact investments.

FOMC meeting minutes: inflation on the rise?

This week, the ==Federal Reserve Board, along with the Federal Open Market Committee (FOMC)==, released the minutes from its meeting held on May 1-2, 2018. The Fed gave no signs of speeding up interest rate hikes, but many experts predict June will see increases in interest rates.

The minutes suggested the potential for a temporary ==rise in inflation== that would be slightly above 2% due to economic expansion. The Fed continue to view the economy as strong, although some expressed concerns regarding the impact of global trade tensions between the U.S. and China on U.S. business investments.

Markets react to uncertainty with short-term fluctuations

The Fed’s calm attitude toward inflation may have been what caused the markets to modestly increase at closing on Wednesday (always good for you, MoneyLion Plus investors). Although, the Fed’s comments didn’t have a lasting impact on the markets. As President Trump announced he would cancel the North Korean summit, the markets slumped Thursday.

These ups and downs are another lesson in the importance of patience and in having a long-term view. Largely because of diversification, your MoneyLion Plus managed account is constructed with the goal of growing steadily over time regardless of these fluctuations in the market.

Not a MoneyLion Plus member?

Take advantage of the strong U.S. economy with MoneyLion Plus (learn more: ==online== | ==mobile==). The monthly membership offers you a managed investment account, access to a 5.99% APR loan whenever you need it, and $1 daily cashback (along with other rewards). Good credit is not required, and you’ll get $10 when you sign up.

P.S. Soon, MoneyLion Plus will also include a debit and checking account with 0% APR cash advances, no overdraft fees, and other perks!

Checking accounts will be offered through a third-party partner bank, Member FDIC.

MoneyLion Plus membership required. View full terms and conditions ==here==.

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