The dollar smile has turned into more of a smirk. More important, allowing the economy to run hot cuts off the right tail of USD higher risk. Higher US growth will stoke global demand and increase the supply of dollars worldwide, but now it will not necessarily lead to USD outperformance – the right-hand side of the traditional dollar smile is now flat. The left-hand side of the smile? Still dollar bullish, but with the Fed ultra-accommodative, this environment is now less likely to emerge. By shifting to an ultra-dovish policy stance, the Fed has shifted distribution of USD returns to the left.