Global financial market in clearly in turmoil, if not chaos and federal funds rate is suggesting that investors have pushed back their expectations of next hike from US Federal Reserve from March to June in the course of last two weeks.

Since Dollar has been relying much on monetary policy divergence isn't this bad for Dollar.

There are few key points to note here before we can conclude hike expectations setback is bad for Dollar.

• Global financial market turmoil is not unique to United States and affecting monetary policy expectations from not only FED but other central banks included. So, relative divergence remains same or could be higher.
• Dollar is though not traditional safe haven like Yen (which has gained against Dollar) and more of a liquidity haven. But Dollar still gets some bid during turmoil.
• Commodity rout has also helped Dollar to remain well bid against commodity currencies.
• Emerging market selloffs are prompting investors to dump EM currencies and hold Dollar.

So, when FED hike expectations would suffer push back due to turmoil (S&P 500 dropping alone), risks (US economy slowing down) and commentaries (FOMC) unique to United States, Dollar would suffer, until then DOLLAR RULES.

Dollar index is currently trading at 99, up 0.5% for the year.