The Fed no longer keeps promises of being "patient". The March's FOMC statement was, however, interpreted as dovish, which caused the plunge in the U.S. dollar. Nevertheless, the renewed expectations of the interest rate hike (caused by some Fed officials' hawkish statements or stronger economic data in the second quarter due to low base in the first quarter) may cause the U.S. dollar to rally further, which could harm the emerging markets and unwind the carry trade. It is then high time we explain the consequences of the possible next bull in the greenback for the global economy. Let's begin from the impact on the U.S. economy - it seems there is lot of confusion concerning what a strong dollar means for America. First, the rise in the U.S. dollar index is definitely positive for the American consumers (and companies importing raw materials and intermediate goods), because it allows them to buy foreign goods and services (like traveling) cheaper, hence increasing their real purchasing power. It also helps to put downward price pressure on prices of commodities, as they are denominated in the U.S. dollar. The U.S. being a big net importer of goods and services, the strong dollar should be really welcomed. Read more