US Dollar: Fed-backed strength holds near yearly highs – ING

ING’s Chris Turner notes the Dollar remains strongly supported, with the DXY index near its highs for the year as solid US activity data reinforces the Federal Reserve’s hawkish stance. He highlights resilient consumer spending, signs of accelerating payrolls and expectations for firm ISM readings.

DXY strength anchored by US data

"The DXY dollar index is testing the highs of the year at 101.80. Dollar debasement fears have been set aside for now as the cyclical story takes centre stage. Here the US economy is performing reasonably well and the market prices the need for the Fed to take policy into restrictive territory."

"Firming up the view that the Fed will need to tighten again has been the activity side, where consumer spending data is holding up and there are even signs that payroll growth is accelerating again – this from the monthly ADP report released yesterday. All eyes will once again be on tomorrow's September nonfarm payrolls release."

"Barring some breakthrough in US-Iran negotiations, it looks like the dollar will stay bid in October. For reference, DXY has appreciated in seven of the last 10 Octobers."

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