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U.S. dollar strength climbs to new highs

The US dollar is stronger now than it has been in over a decade.

Michelle Girard, Senior Economist at RBS, thinks a strong dollar is a mixed sign for the U.S. economy.

“There's clearly been a lot of concern about the adverse impact and the truth is for the most part, in terms of exports and manufacturing, it's been limited,” she says. “We've definitely seen a bit of a slowing in manufacturing activity from where we were last fall when it was just booming. Maybe that’s just the oil story as well which is related to the dollar.”

Girard warns that consumer sentiment is a channel that should be watched closely.

“I'm not so worried about the direct impact on exports as I am about the indirect impact that it may have on company earnings,” she says. “A lot of earnings are made overseas. So even if there isn't an impact on exports, the earnings numbers look weaker, which undermines the equity market and then that feeds more broadly to how people feel about spending domestically.”

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Friday’s jobs report highlighted the growing disparity between U.S. and European economies. Yahoo Finance Editor in Chief Andy Serwer notes this trend.

“Think about for a minute the divergence between the U.S. economy and Europe, and of course the dollar is stronger yet again today. It's like night and day.”

Yahoo Finance’s Aaron Task points out that Fed stimulus policies so far haven’t had the effect economic doomsayer’s thought.

“You've heard this for several years when the Fed started doing quantitative easing, ‘Well that's it. We're going to be the Weimar Republic. We'll have wheelbarrows full of dollars to buy a loaf of bread,’” he says. “If you've been waiting for the apocalypse, you've missed out on six years of a rally. It's just something to think about when you hear someone say something outrageous either good or bad, take it with a big grain of salt.”

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