2015 started with a fresh US dollar rally, as the DXY dollar index jumped nearly a percent on Friday. The dollar strength and its consequences will be a key theme for the economy and markets this year.
 

Source: barchart

One of the consequences of course is continuing pressure on commodities markets, as Brent crude futures tumbled below $57/bbl.
 

Source: barchart

In fact the whole commodity complex took another led gown, as aluminum and copper came under pressure. Here are a couple of broad commodity indices worth following: the CRB BLS Spot Index and the Continuous Commodity Index - both at multi-year lows.
 

Source: barchart

With commodity prices under pressure again and import prices expected to fall due to stronger dollar, the U.S. 5x5 forward inflation expectation rate (5-year inflation expectation starting 5 years out) hit a 3-year low. 
 

It's difficult to imagine how the Fed could consider raising rates (expected in Q3) in this environment - even if labor markets continue to improve. Consider the fact that monetary conditions have tightened sharply over the past couple of months even without the Fed doing anything, as real rates rose.
 

While setting the overnight rate at 50bp will by itself  have a minimal effect on the economy, the expectations of higher rate differentials with other developed economies will send the dollar even higher, further weakening inflation expectations and materially tightening monetary conditions.