US Dollar stays fundamentally supported – Scotiabank

Scotiabank’s Global FX Strategy team, led by Shaun Osborne and Eric Theoret, notes broad Dollar strength versus most G10 currencies, with focus on Oil, US yields and the Federal Reserve rate path. The team stresses that DXY gains since early September are fundamentally driven by 2-year yield spreads.

Broad G10 defensive tone versus Dollar

"The broader tone is somewhat defensive, leaning toward mild risk aversion as US equity futures show modest losses while US bond yields remain well supported with the 10Y hitting a fresh marginal high—extending above 5.2% to reach its highest level since 2007."

"The shape of the curve is also starting to garner some attention, given the renewed flattening and its implications for the broader USD."

"For the DXY, we continue to highlight that the gains from early September have been fundamentally driven, with spot largely moving in tandem with our fair value estimate based on 2Y spreads—currently at 100.5 (vs. spot just above 101)."

"The recent gains have pushed the DXY toward the June 24 high that marked the local peak and 2026 YTD high."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)