US dollar strength will weigh on exports to Europe
Monday, May 4, 2015
Significance
The dollar has risen sharply in the past year; on May 1, 2014, the euro traded close to 1.39 dollars compared to 1.11 dollars today. The trade weighted dollar index is up 20% in that time.
Impacts
- US growth in 2015 is likely to be in the 2.5-2.7% range.
- An impasse over the federal budget is likely, but a return to sequestration-level fiscal headwinds is not.
- September is the most likely date for the Fed to raise interest rates, but a delay is possible if data continue to be weak.