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.
ING's Chris Turner emphasizes that the US Dollar enjoys robust backing, with the DXY index approaching its yearly highs. This strength is fueled by robust US economic data, signaling a hawkish Federal Reserve. Key factors include consumer spending that remains resilient, increasing job growth, and predictions of strong Industrial Production numbers.
The DXY is currently hovering around the 101.80 mark. Concerns about a weakening Dollar have been put aside as the narrative shifts towards the cyclical performance of the US economy, which appears to be in good shape. The market anticipates the Federal Reserve will need to tighten monetary policy again, as evidenced by solid consumer spending data and potential acceleration in payroll growth, as highlighted by the latest ADP report.
The focus remains on the upcoming September nonfarm payrolls release. Unless there is a significant breakthrough in US-Iran talks, the Dollar is expected to continue gaining in strength throughout October. Historically, the DXY has risen in seven out of the last ten October months.
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