Once again, like it or not, the economic data confirm that the U.S. dollar remains the best house in a lousy neighborhood.

So we got the FOMC statement wherein the last phrase says it all, or if you want, says nothing, about when normalization could start: “…The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

Anyway, on the economy the statement reads:

• economic growth slowed during the winter months, in part reflecting transitory factors (+0.2 percent in Q1-2015 after +2.2 percent in Q4-2014 and +5 percent on Q3-2014)
• business fixed investment softened (-3.4 percent)
• households' real incomes [disposable income] rose strongly (+6.2 percent)
• growth in household spending declined (+1.9 percent)
• the pace of job gains moderated, and the unemployment rate [nonfarm payrolls] remained steady (+2.2 percent)
• exports declined (-7.2 percent)
• inflation continued to run below the Committee's longer-run objective (+1.2 percent excl. food/energy).

Please keep in mind we’ll get the “second” estimate for GDP in Q1 on the 29th of this month.

Whatever comes out, for the next few months, it all will come down to a wait and see situation till we get on July 30 the advance estimate of the second quarter GDP.

As far as Goldman Sachs is concerned they didn’t wait and just informed they expect GDP in Q2 to grow by 3.0 percent.

In context of the recent cooling of the dollar’s strength while keeping in mind the dollar had come too far too quickly, I hereby give my rationale why I personally remain positive on the dollar over the median to long-term, because of a multiple of reasons and of which a few of them are:

• U.S. wage growth rose to +2.6 percent during the first quarter while compensation costs for private industry workers increased 2.8 percent over the year, which together are the first clear signs of a tightening in the labor market.
• The 5-year breakeven inflation rate has now risen to 1.72 percent, up from 1.05 percent on January 13, 2015, while the 5-year, 5-year forward inflation expectation rate now stands at 2.14 percent.

And when we look into the dollar’s fundamentals it could be helpful to put them in comparison with the situation the euro is facing:

• The so-called eurozone (EZ) “has turned the corner” story didn’t show up in the just released EZ unemployment numbers that remained at 11.3 percent while youth unemployment remained unchanged at 22.7 percent with the highest rates in Spain at 50.1 percent and Italy at 43.1 percent (no numbers for Greece) while the just released flash estimate of the EZ inflation rate now stands, on a yearly basis, only at zero = 0.0 percent.
• The bi-monthly overview provided by the Dutch NIBC merchant bank, which is owned by a consortium of international financial institutions, shows since Q1 of 2009 the divergence in growth between the “real” GDP of the U.S. and the eurozone (EZ) has grown to about 7 percent and is expected to grow further.
• The IMF's “Global Financial Stability Report” informs European banks have a 900 billion euros or about $1 trillion stock of bad loans (up from 800 billion euros a year ago), which restrains EZ banks from providing “justifiable” loans to the nonfinancial private sector.
• "Sell in May and go away" could very well resonate for bond investors after the German Bunds’ and to a lesser extend U.S. Treasurys’ April performance.