The US Dollar Index is up 2.8% for the year as of Friday morning, strengthening once again after a bumpy 2023. Wall Street has accepted that interest rate cuts are coming later than previously expected, as Fed Chair Jerome Powell said in January that such cuts are unlikely to begin in March.
In recent weeks, piping hot economic data has supported the notion that the Federal Reserve will keep rates higher for longer. The economy added an eye-popping 353,000 jobs in January, underscoring the labor market’s continued resilience despite elevated rates. The Consumer Price Index rose 3.4% annually in December, still above the central bank’s 2% target.
A stronger dollar is bad news for American companies but also means that US companies and consumers could spend less for imported goods and Americans’ purchasing power increases when traveling abroad. However, it is important to note how the economy is performing in Bismarck and North Dakota as well.