The dollar index closed 99.16 on 4 September, up 0.16 percent from 99.00. A reading under 100 still sits short of four percent below the 200-day average. Any five-point narrowing of the US versus ex-US forward P/E gap still has to arrive with that weakness, and the gap series is still pending.
Ninety-nine looks cheap because 100 is a round number. The euro closed at 1.1621, down 0.06 percent. Sterling closed at 1.3517, down 0.11 percent. The yen closed at 156.22, up 0.36 percent, which is a softer yen, not a dollar scare. The ten-year yield finished at 4.78 percent, up two basis points from 4.76. The S&P 500 closed 7,718.6, down 0.38 percent, with 42 percent of members advancing.
Hang Seng closed 25,213.3 on Friday 4 September, down 0.39 percent from 25,311.2. Nikkei closed 64,214.5, down 0.17 percent from 64,325.6. Euro Stoxx closed 6,392.9, up 0.16 percent. FTSE closed 10,831.1, unchanged. Asia closed down. Europe did not share that print. The US average went the other way from Europe. A reading under 100 still leaves those boards on different sides.
An unhedged holder of non-US shares earns two things: the local return and the exchange-rate return. When the dollar firms, the second leg eats the first. When the dollar weakens, the second leg adds. The dollar also tightens conditions outside the United States. Dollar debt costs more to service. Importers pay more for commodities. That is why a weak dollar is necessary for the discount to close. A reading of ninety-nine is neither.
The dollar index closed at 99.16 on 4 September, up 0.16 percent from 99.00. The euro closed at 1.1621. Sterling closed at 1.3517. The yen closed at 156.22, a softer yen, not a dollar scare. Ninety-nine looks cheap because 100 is a round number. The gap series is still pending. Until it is wired, the claim cannot resolve.