The U.S. dollar is on a strong upward trend in early 2015.
Last Friday, the February jobs report was released with more positive data for the U.S. economy. The overall unemployment rate dropped to 5.5 percent with another 295,000 jobs added, which capped the best 12 months of consistent job growth in the past 20 years.
In addition, the U.S. dollar continues to get stronger compared with other currencies, as the European Union launches a new quantitative easing program. The irony of all of these glowing economic indicators for the U.S. is that stock markets are shaking under the assumption that interest rates will increase by the middle of 2015.
It has been widely expected that the Federal Reserve will begin to push a rate hike by June 2015, which would be the first increase in nearly a decade. If rates are pushed upward - including mortgage interest rates - investors fear it would have a damaging effect on continued growth. Despite many happy economic signs, lingering issues such as stagnant wage growth and low inflation are reason enough for some to urge Fed officials to hold off on raising rates.
If the U.S. dollar continues to shine while currencies around the world suffer, global economic weakness will in turn temper U.S. growth. Financial markets rest on a see-saw that is constantly tipping in one direction or another. If it slides too far in one direction, there's always the potential for turmoil to erupt before it's corrected.
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