After a tumultuous 2023, the greenback is experiencing a resurgence, with Wall Street acknowledging that interest rate cuts will come later than previously anticipated. The US Dollar Index, which monitors the dollar against the British pound, euro, Swiss franc, Japanese yen, Canadian dollar and Swedish krona, has risen by 2.8% for the year as of Friday morning. Despite faltering last November and concluding the year with a lower value against that range of currencies due to investors becoming more hopeful that the Federal Reserve would soon lower interest rates, Fed Chair Jerome Powell stated in January that interest rate cuts are unlikely to begin in March.
Recent economic data has reinforced the idea that the Fed will maintain higher rates for a longer duration. The economy saw an astounding 353,000 new jobs in January, emphasizing the sustained robustness of the job market despite elevated rates. The Consumer Price Index escalated by 3.4% yearly in December, still exceeding the central bank’s 2% objective. A stronger dollar is unfavorable for American companies but implies that US companies and consumers may spend less on imported goods and increases their purchasing power when traveling abroad. It would be worth considering how well Bismarck and North Dakota performed during this period as well.