You get the impression often that these guys have no idea what drives the dollar. They cling to all sorts of theories, of course, from interest rate differentials to perceptions of economic strength. That seemed to be the case in 2017 and its “weak dollar” environment. Globally synchronized growth would mean potency pretty much everywhere, thus, in this view, a lower dollar exchange value more consistent with the days before Bear Stearns.

The IMF in its World Economic Outlook (WEO) summed up these expectations this past January:

The cyclical upswing underway since mid-2016 has continued to strengthen. Some 120 economies, accounting for three quarters of world GDP, have seen a pickup in growth in year-on-year terms in 2017, the broadest synchronized global growth upsurge since 2010… Key emerging market and developing economies, including Brazil, China, and South Africa, also posted third-quarter growth stronger than the fall forecasts. High-frequency hard data and sentiment indicators point to a continuation of strong momentum in the fourth quarter. World trade has grown strongly in recent months, supported by a pickup in investment, particularly among advanced economies, and increased manufacturing output in Asia in the run up to the launch of new smartphone models.

Just six months later, however, “something” had changed. In its July 2018 WEO, the IMF admitted:

Global growth is projected to reach 3.9 percent in 2018 and 2019, in line with the forecast of the April 2018 World Economic Outlook (WEO), but the expansion is becoming less even, and risks to the outlook are mounting. The rate of expansion appears to have peaked in some major economies and growth has become less synchronized. [emphasis added]

To begin with, 3.9% isn’t all that positive for global GDP expansion. That’s about half of what it would be if there was an actually healthy economy in progress. But that wasn’t really the point of globally synchronized growth. In other words, a real expansion would come later because for the first time since 2007 the vast majority of the world was at least positive again.