Next week it looks as though the U.S Federal Reserve is going to raise rates once again.
In fact, according to CME Group, the market is currently pricing in a 91.3% probability of a rate rise at its June 13 meeting. That 25-basis point rise would lift the target rate up to between 1.75% and 2%.
Looking further ahead, the data shows that the market has also priced in a 67% chance of another rate hike in September, lifting the target rate to between 2% and 2.25%.
Back home it is a very different story with many economists not expecting the Reserve Bank of Australia to raise rates until the end of next year.
I think this could put considerable pressure on the Australian dollar and send it down towards the 70 U.S. cents mark.
This could give companies with exposure to international markets a boost from favourable currency movements. Three that I expect to benefit are listed below:
Appen Ltd (ASX: APX)
Almost all Appen’s revenue is derived overseas, with the majority of it in U.S. dollars. In FY 2017 a strengthening Australian dollar was a headwind for this machine learning and artificial intelligence dataset provider, reducing revenue by approximately $5.5 million and EBITDA by $1.2 million. This headwind could become a tailwind in FY 2018 if the local currency tumbles lower.
Aristocrat Leisure Limited (ASX: ALL)
In its recent first-half results Aristocrat Leisure generated $764.9 million or 47% of its revenue in the Americas segment. In addition to this, its fast-growing digital business generated 33.7% of total revenue. While this segment is not broken down geographically, the United States is believed to be the main market for its games. As a result, I see Aristocrat Leisure as a big winner from a weaker Australian dollar.
Hansen Technologies Limited (ASX: HSN)
Another potential winner from a weaker Australian dollar could be this billing and data management solutions provider. In the first-half of FY 2018 Hansen delivered a 36.3% increase in revenue to $118.4 million. Approximately 24% of this revenue was generated in its Americas segment. This could make Hansen worth considering as a patient buy and hold investment.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and Hansen Technologies. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.