Soft stocks and firm or firmer US yields will keep the USD supported in the short run – Scotiabank

The US Dollar (USD) is firmer today but has edged off earlier highs versus the majors. Economists at Scotiabank analyze Greenback’s outlook.

Weak risk mood adds to USD support

While the January data round for the US got off to a poor start on Tuesday, with a much weaker-than-expected Empire Manufacturing Survey, the USD barely flinched. Higher US yields and supportive comments from the Fed’s Waller – who at the very least sounded in no rush to cut rates – helped keep the USD supported.

Soft stocks and firm or firmer US yields (Treasurys are little changed on the day) will keep the USD supported in the short run and help extend the USD’s corrective rebound in the early part of this year.