As U.S. markets were closed to mark the Labor Day holiday, the dollar index surged to a new three-decade high.

This is a reminder that the dollar index is a relative, rather than an absolute, price—that is, it measures the value of the dollar relative to other currencies. But this also signals that while the U.S. is likely to outperform other countries in most global macroeconomic scenarios for the year ahead, policymakers and market participants still need to keep a close eye on what's going on elsewhere in the world, as global events will have a meaningful impact on the overall well-being of the United States.

On Monday, the DXY dollar index appreciated to a level not seen since 2001. The move was driven by broad-based weakness in other currencies, with particularly notable moves against the pound sterling (which hit a new record low against the dollar) and the euro (which traded below 0.99 to the dollar).