Through all the static of the global economy, one constant has held true for the past decade: the U.S. dollar has been a counter-cyclical safe haven. It weakens when the business cycle improves, and rises when higher-yielding assets fall (and vice versa.)
The dollar has soared in the new era of good feelings, following strong nonfarm payroll and retail sales data that have economists believing the recovery could be for real this time. The shift has implications for currencies, oil, and even equities.
The move towards energy independence reduces the U.S. current account deficit while extending its growth advantage over Europe and Japan.
The full potential of the US energy independence story is a game changer for the US in the global competitiveness landscape, especially against China and Europe. And this time around the good news should benefit the greenback and the US economy.