Dollar Recovery Hinges on Upcoming Data as Rate Hike Odds Remain Elevated

The US Dollar has staged a significant recovery from its recent pullback, according to Brown Brothers Harriman's (BBH) analysis. The Fed funds futures are pricing in a 67% chance of a 25bps rate hike on September 16 and imply 60bps of tightening over the next twelve months.

Elias Haddad notes that upcoming data releases will be crucial in determining whether this rate hike materializes. Key tests include the August CPI on September 11, which is expected to be decisive.

The ISM manufacturing index and July Job Openings and Labor Turnover Survey (JOLTS) are also set to release today. The headline index for the ISM manufacturing index is anticipated at 55.2, consistent with resilient manufacturing activity.