The stronger United States dollar is starting to show through in the reported earnings of major US companies, Forsyth Barr broker Peter Young says.
The US dollar has appreciated 22% on a trade-weighted index basis since the middle of 2014.
Rather than higher interest rates driving the currency higher, it had been relative economic weakness in the rest of the world favouring the US dollar, he said.
"Now the Federal Reserve has started to hike interest rates, the expectation is the US dollar will continue to appreciate. However, the recent reporting season in the US underpins why the Fed has a challenge on its hands in wanting to push rates higher while the rest of the world maintains a stagnant rate of growth.''
Recently, the Wall St Journal ran an extensive article on how the strong US dollar hurt tech companies ranging from Apple to IBM because they sold so much hardware, software and services outside the US, Mr Young said.
Apple, which received 66% of its revenue from outside the US, said last week the US dollar cost it nearly $US5 billion ($NZ7.56 billion) last quarter, reducing its revenue to $US75.9billion.
The strong dollar reduced Microsoft's revenue by about $US1.9billion in the December quarter.
The currency impact at IBM was about $US1.5billion.
Alphabet, formerly known as Google, said the negative impact of currency rates reduced fourth-quarter revenue by about $US1billion to $21.33billion.
Market researcher Gartner Inc estimated the US dollar's rise took $US217billion from global information technology spending in 2015, a bigger effect than the 2009 financial crisis.
US exporters were also finding their revenue diminished by currency translations, Mr Young said.
General Motors posted $US152.4 billion of revenue, down from $US155.9billion in 2014, blaming a foreign exchange currency impact of $US9.3billion.
Also last week, 3M provided some detail about the impact the dollar was having.
Organic sales, which excluded the effect of currency translations, fell 1.1% year-on-year.
Without backing out the effect of currency translation, revenue dropped 5.4%.
Proctor & Gamble reported 2% organic sales growth but, after the impact of currency translation was included, net sales sank 9%.
Kimberly-Clark's 6% fall in sales in the fourth quarter was wholly attributable to the strong dollar, according to a Financial Times article.
Revenue at Johnson & Johnson was dragged down 2.4% to $US17.8billion, Mr Young said.
"What this is translating to is the Fed's ability to raise rates again is limited.''
If the Fed did move to a "hold'' position, the US dollar might be approaching its peak, he said.
That would be a positive for US multinationals, and for commodity prices and debt-servicing costs for borrowers of the US dollar - China and other emerging markets, in particular.
