US Dollar: Fed backing holds with data in focus – BBH

The US Dollar (USD) has retraced some of its post-NFP gains, notes Elias Haddad of Brown Brothers Harriman (BBH). However, resilient US economic activity, a solid labour market and persistent inflation continue to support the Federal Reserve’s (Fed) hawkish stance, lending support to the currency. The forthcoming US October CPI and PPI reports will be key to shaping Fed funds rate expectations ahead of the December policy meeting.

Dollar Supported as Fed Data Take Focus

"USD pared back some of Friday’s strong October non-farm payrolls gains. Going forward, robust US economic activity, favorable labor market conditions and sticky underlying inflation back the Fed’s hawkish bias, keeping rate differentials supportive of USD"

"The October New York Fed consumer survey is today’s data highlight (4:00pm London, 11:00am New York). But this week’s US October CPI (Tuesday) and PPI (Friday) prints will be the main drivers of Fed funds rate expectations. Fed funds futures imply 80% odds of a 25bps hike at the next December 9 policy decision."

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