The US dollar is soaring – So which ASX stocks stand to benefit?

The US Dollar Index has surged 6.3% since late September, completing an impressive eight-week rally – the longest since September 2023. Over the same time period, the Australian Dollar has dipped by a similar magnitude and is hovering near a seven-month low.

Bloomberg reports that speculative traders have ramped up their dollar-positive bets to the most bullish level since late June, signalling confidence in further gains.

 

As the US Dollar continues to trend higher, you might start to think – Which ASX-listed companies stand to benefit?

Sector Winners and Losers

• Beta: Measure of a stock's volatility relative to the market (or, in this case, relative to the Australian dollar). A beta of one or more suggests the stock is aggressive and its price movements are more volatile than the Aussie.
• T-Stat: A high T-stat suggests that the movements between the Aussie and cyclical sectors are unlikely to be due to chance. A low T-Stat suggests that the difference could be attributed to random variations or other factors.

The data shows that cyclical sectors have historically outperformed in a falling US dollar environment.

Stocks by US Dollar Exposure

For instance, Aristocrat Leisure says a single US cent change in the AUD/USD exchange rate could translate to an estimated $24 million impact on the Group's net profit after tax for the year ending 30 September 2024. This isn't a game-changer but may present a small incremental change to earnings.