The US Dollar index has made a nice move higher towards the top end of its multi-month sideways trading range over the past week or so. After trading in a nasty downtrend through the first four months of the year, the Dollar has definitely been building a nice base throughout the entire summer. From a technical standpoint, the currency certainly appears ready to enter a longer-term uptrend if it can manage to break out of its range in the coming days.
If the Dollar does manage to enter into a longer-term uptrend, companies that generate the bulk of or all of their business inside the US stand to benefit at the expense of companies with a large international presence. Since bottoming on April 29th (the same day that equities peaked), the US Dollar index is only up slightly, yet companies that generate all of their business inside of the US have outperformed. As shown below, the average Russell 1,000 stock has declined 18.5% since April 29th. The average performance of Russell 1,000 stocks with all US revenues has been -15.5% since 4/29, however, while the companies with more than 80% international revenues have declined an average of 24%.