Strong dollar a headwind to businesses, but a tailwind to consumers

A strong dollar is a key factor for economic outlook. The dollar has risen considerably over the past year especially relative to the currencies of other advanced economies. On a broad trade-weighted basis, the dollar is up over 12% relative to its level a year ago.

A rising dollar makes exports more expensive for foreign purchasers and imports cheaper. Combined with relatively modest economic growth outside of the United States, this is expected to cause net-exports to subtract 0.7 percentage points from economic growth in 2015, said TD Economics

The strong dollar and weak global growth will also take a bite out of corporate profits, with net profits earned abroad contracting by close to 10% in 2015, subtracting two percentage points from total profit growth.

The dollar's rise is not all negative. The pass through of lower import prices reduces inflation and raises consumers' purchasing power. This will show up in greater consumer spending growth over the remainder of this year, offsetting some of the drag from international trade, adds TD Economics