US Dollar: Fed backing continues as markets monitor data – BBH

Despite surrendering some of its post-NFP gains, the US Dollar (USD) remains supported by resilient US economic activity, a strong labour market and persistent inflation, according to Brown Brothers Harriman’s (BBH) Elias Haddad. These conditions reinforce the Federal Reserve’s (Fed) hawkish stance. Ahead of the December policy meeting, the forthcoming US October CPI and PPI releases are set to be key drivers of Fed funds rate expectations.

Can the Fed’s Data Focus Keep the Dollar Supported?

"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. Know more.)