THE DOW Jones Industrial Average closed above 22,000 on August 2nd, something President Trump is almost certain to mention in a tweet soon*. So it might seem as if the “Trump bump”, which began on the night of the election, is continuing smoothly. But the picture is a lot more complex than that as a look at the euro/dollar rate shows (see chart). The euro fell (and the dollar rose) between election day and the end of 2016. But then came a turning point. The euro has been climbing (and the dollar retreating) for much of 2017.
For dollar-based investors, that means European shares have been a much better bet this year. As of august 2nd, euro zone shares (as measured by the FTSE Euro 100) were up 19.9% since the start of the year, while the S&P 500 was up10.7%. Looked at another way, the American market has dropped by 8% in euro terms since February 2nd.