From July 2014 to date, the dollar has risen by 17% and this increase is one of the reasons why the U.S. economy registered paltry growth of only 2% y-o-y in the third quarter. But the market thinks that the strong dollar is here to stay and it is becoming a factor that US policymakers must consider.
Ofelia Marín- Lozano | The close to 40% drop in raw material prices over the last year has been taken as an unmistakable sign of a strong slowdown in China, auguring a very negative outlook for producing countries. But the market has seen that the alarm bells sounded over China have been clearly unfounded, as major global companies like Apple are still seeing high levels of sales in the country.
ZURICH | By UBS analysts | Will a strong dollar much weaken overall U.S. growth and inflation? The answer importantly depends on how much export and import prices respond to changes in the dollar’s foreign exchange value. Exporters may cut dollar prices and profit margins in order to blunt a stronger dollar’s impact on their market shares and volumes. In fact, over the three months through October, dollar prices of nonagricultural exports fell steadily (by a cumulative 1.3%).