No question the U.S. job market is percolating along at a good, solid clip. Last month’s 280,000 net new jobs is a welcome addition to a labor market that is clearly tightening up, and while unemployment ticked up a slight notch, from 5.4 to 5.5 percent, the increase was for the “right” reason: more people joining the labor force (and ftr, the increase — from 0.0544 to 0.0551 — was statistically insignificant).

And yet … there’s a headwind out there, and it’s one we should be mindful of for a number of reasons.

I’m talking about the strong U.S. dollar.

How could “strong” be bad? Well, it’s not all bad, but when the value of the dollar goes up relative to the currencies of countries with whom we trade, that makes our exports to them more expensive in their markets, and their exports to us cheaper over here. That leads to a larger trade deficit, slower growth, and a tougher competitive environment for our manufacturers (our trade deficit is wholly in manufactured goods).

Over the past year, the value of the dollar is up 18 percent against the currencies of our major trading partners, triggering the dynamics noted above. For example, over the past six months, the rising trade deficit shaved 1.5 percentage points off of annualized GDP growth.

In the job market — which again, is reliably improving in most sectors — the strong dollar appears to have really hit the brakes on factory job growth. The figure above plots an index of the dollar against other currencies and the monthly change in manufacturing jobs. Last year, we added about 18,000 jobs a month in the sector, on average. This year, we’re bouncing along the bottom — the average gain over the past three months is only 5,000.

Here’s why this matters.

First, these tend to be better than average jobs, paying about 10 percent above the economy’s average, once you add in non-wage benefits (15 percent for lower-wage workers).

Second, in the midst of this big debate over President Obama’s Trans Pacific Partnership trade agreement, a number of policy makers have argued, correctly in my view, that we should put enforceable rules against currency manipulation in such deals, to discourage trading partners from managing their currencies to get the same kind of edge you see at work in the figure.

The administration points out, completely correctly, that this current episode of a rising dollar is not driven by competitors intervening in currency markets to boost their exports to us. Instead, it’s driven by relative growth rates — we’re growing faster than other economies and so our currency is more highly valued — and ongoing actions by central banks (more about that in a moment).

But the current episode is a reminder of the costs of a strong dollar to our exporters and there’s no reason to think our trading partners have banished currency manipulation from their toolboxes.

Third, as noted, another reason for the strong dollar is that our Federal Reserve plans to raise interest rates in the none-too-distant future. It’s a controversial move, because the point of the rate hike is to slow the economy down a bit in the interest of preventing overheating and inflation. Yet even as the job market consistently improves, there’s no evidence of inflationary pressures, so many, including most recently the International Monetary Fund, have suggested that the Fed hold off.

Well, the figure above provides another reason for the Fed to wait. Raising interest rates also raises the the value of the dollar, so based on the dynamics I’ve described, it pushes the wrong way. Also, the increase in the dollar we’ve seen thus far is itself dis-inflationary, as it makes imports cheaper, giving the Fed less to angst re price pressures.

The morals of the story are thus: a) the U.S. economy and job market are improving, but there’s a headwind coming from the stronger dollar, b) a premature rate hike by the Fed has the potential to strengthen that headwind, and c) if you’re gonna make a trade deal, include currency rules!