{
  "id": 9756297,
  "title": "US Dollar: Rate differentials support but upside constrained – BBH",
  "url": "https://urgent.news/2026/09/25/us-dollar-rate-differentials-support-but-upside-constrained-bbh",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-25T11:39:53.000Z",
  "source": {
    "name": "FXStreet",
    "slug": "fxstreet",
    "url": "https://www.fxstreet.com/news/us-dollar-rate-differentials-support-but-upside-constrained-bbh-202609251139"
  },
  "original_language": "en",
  "account": "Brown Brothers Harriman's Elias Haddad points out that the recent decline in oil prices has reduced global bond selling and softened the dollar rally. Haddad believes the USD can still profit from widening US-G6 rate differentials, although tightening by other major central banks may limit policy divergence and hinder a sustained move above its June high. Strong foreign demand for US securities helps offset this limitation. A recent upturn in crude oil prices was halted by news of potential US-Iranian negotiations to reopen the Strait of Hormuz. This slight oil price drop eased the global bond sell-off and reduced the USD rally's intensity. Despite these factors, the USD can still benefit from the increasing US-G6 interest rate gaps. However, tightening moves by other major central banks may make it challenging for the USD to maintain an overperformance of its June high. Strong economic growth in the United States and a significant foreign appetite for US securities help compensate for this downside constraint. In the past year up to July, foreign investors have amassed $1,754 billion in long-term US securities, which is more than twice the country's $743 billion trade deficit. This indicates a robust underlying demand for the USD. On Friday, AUD/USD hit a new low since early August during the Asian session and appeared vulnerable near 0.7000 after breaking below the 200-day simple moving average. The recent hawkish stance of the Fed, rising oil prices, and rising geopolitical risks continue to push the US dollar to a two-month high, overshadowing expectations of a rate hike by the Reserve Bank of Australia and weighing on the pair. USD/JPY fell on Friday, failing to reach its recent three-week peak of 159.00 as Japanese Yen traders become more cautious amid possible intervention. Throughout the Asian session, the US dollar stayed bullish, driven by the Federal Reserve's hawkish outlook and fears of inflation fueled by higher oil prices. In addition, the Bank of Japan's dovish move last week could limit the yen's strength and support spot prices. Gold experienced a slight recovery on Friday, trading just below the $4,300 mark after bouncing from support around the $4,230 level. However, the overall bearish trend persists, as expectations of further Federal Reserve rate hikes and long-term US Treasury yields exceeding 5% pose significant challenges for precious metals. The Bank of Japan (BoJ) increased its short-term interest rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalization of monetary policy and aligning with market expectations.",
  "summary": "Brown Brothers Harriman’s (BBH) Elias Haddad notes that the recent pullback in Oil prices has eased global bond selling and cooled the Dollar rally.",
  "key_points": [
    "Recent decline in oil prices reduced global bond selling and eased USD rally intensity",
    "Strong foreign demand for US securities and robust US economic growth offset downside constraint"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}