Skechers U.S.A., Inc. (SKX)

Daily Spotlight: Dollar Drops from HighsThe dollar has drifted 5% from cycle highs in the past two months, falling as the outlook for further aggressive rate hikes has cooled. The greenback spiked early in the pandemic, when global investors flocked to the security of assets denominated in U.S. currency. After peaking in April 2020, the greenback declined into 2021 but then rose again for much of 2022, driven by uncertainty surrounding the Russian invasion of Ukraine, soaring inflation, and higher global interest rates. By October, on a real trade-weighted basis, the dollar was 23% above the average valuation over the past 20 years. But inflation in the U.S. consistently has trended lower since peaking in the summer, and the Federal Reserve has started to back off its ultra-aggressive rate-hike campaign. Looking ahead, we anticipate a trading range around current levels for the greenback for the balance of the year. That's because we think U.S. GDP growth may be uneven due to the Fed's rate hikes. In addition, we expect the higher rates to increase the interest payments as a percent of GDP from recent lows of 1.5%. Lastly, the lofty current valuation of the greenback implies that other currencies -- and even gold or other commodities -- are possibly undervalued, and we would expect traders to bid up those values over time.