Dollar strength, dollar woes

The U.S. dollar has been getting stronger this year in a way that would give Popeye a run for his money. And that has been a bane for companies that do business abroad.

While the dollar has been appreciating against other currencies all year, the trend has accelerated in recent weeks. The ICE U.S. Dollar index, a measure of the dollar against a basket of other currencies, recovered from a weak spell this summer and is back to levels not seen since March.

The trend is largely attributable to the Federal Reserve. Expectations have been building since October that the Fed is ready to raise interest rates for the first time in nine years at its December meeting. That view was reinforced following the October jobs report, which suggested that the U.S. economy is growing solidly. The Fed’s readiness to raise rates comes just as its counterparts in Europe and Asia are looking to keep rates near zero or to introduce more stimulus. That could send the dollar even higher.

A strong dollar makes goods made in the U.S. more expensive abroad, and that has weighed on company results all year. Manufacturer 3M said the strong dollar cut its revenue by 7 percent in the third quarter.

If the dollar continues to gain strength the rest of this year, it's sure to be a major issue when companies start reporting fourth-quarter results in January.