US Dollar: Growth edge narrative supports gains – BBH

Brown Brothers Harriman's Elias Haddad observes the US Dollar is gaining ground, as economic data and policy actions support its strength. September's US Purchasing Managers' Index (PMI) is anticipated to validate the US's leadership in growth compared to the Eurozone, United Kingdom, and Japan. A Treasury buyback of 20-30 year bonds may stabilize long yields; however, this stability hinges on falling oil prices.

The US Dollar persists in climbing against major currencies due to widening interest rate differentials. Even though other major central banks are tightening policies, the US economy's superior performance ought to maintain the dollar's support. Today's S&P Global PMI figures are expected to demonstrate the US sustaining its growth advantage over the Eurozone, UK, and Japan.

The US Treasury's liquidity assistance buyback operation in the 20-to-30-year sector is slated for today. The market sentiment is relatively more composed than during the prior $6 billion Treasury buyback in the 10-to-20-year sector, which didn't prevent yields from rising. This buyback might further stabilize the long end of the yield curve; yet, enduring relief would necessitate a further drop in oil prices.

Although Brent crude oil prices increased after falling for five consecutive days, they remain just under $100 a barrel. The return of flow from Saudi Arabia's East-West pipeline and US-Iran diplomacy hopes are keeping energy prices in check. US President Donald Trump reported that envoys Steve Witkoff and Jared Kushner held "a very good meeting" with members of the Iranian delegation.