The greenback is gaining strength again in 2023, despite a rocky start. Wall Street is accepting the fact that interest rate cuts may not happen as soon as expected. The US Dollar Index is up 2.8% for the year, after the US currency slid lower against a basket of currencies last November. This came as investors grew optimistic about the Federal Reserve cutting interest rates. However, Fed Chair Jerome Powell stated in January that interest rate cuts would not begin in March, as many investors had previously believed.
Following positive economic data, it now seems likely that the Fed will keep rates higher for a longer period. The economy added 353,000 jobs in January, highlighting strong resilience in the labor market. Despite this, the Consumer Price Index rose 3.4% annually in December, still exceeding the central bank’s 2% target.
A stronger dollar can have negative implications for American companies, but it also means that US companies and consumers could spend less for imported goods. Additionally, Americans’ purchasing power will increase when traveling abroad.
The current state of the economy in Billings and Montana is also worth examining. If you’re interested, you can subscribe to the Daily Headlines newsletter to get local news delivered directly to your inbox.