EQUITIES AND DOLLAR EXPOSURE

The US dollar (DXY index) just fell below 92 , its lowest level since the beginning of the Covid crisis. The downward trend began in the early summer of 2020 , as a result of the Fed's ultra-dove monetary policy and the country's twin deficits. We expect this trend to continue in 2021 , with many potential consequences that are detailed in our dedicated Cross-Expertise paper : Dollar : less bang for your buck In this report , we focus specifically on the dollar impact on sector ial and individual equity performance s . We conclude that the US tech sector, for example, is one of the main beneficiaries of a currency decline. To do so, w e propose a quantitative methodology to estimate exposure s to traditional macro factors . We use it to design equity portfolio s that are abl e to benefit from the dollar's decline or alternatively able to be neutral . Finally, for a non-resident investor wishing to gain exposure to US equities, the methodology allows to adapt the FX hedge to be put in place.