Dollar Defies Slowing Inflation as Fed Hawks Remain Confident

The US Dollar has continued its upward momentum, reaching its June year-to-date high near 101.80 despite a deceleration in core Personal Consumption Expenditures (PCE) inflation.

According to revised inflation metrics, the three-month annualized rate of growth in core PCE has slowed to 2.1%, while the six-month annualized rate has slowed to 2.7%.

Despite this softening, TD Securities expects sticky inflation and a 3.0% Q3 GDP forecast to keep the Federal Reserve (Fed) hawkish.

Oscar Munoz and Eli Nir at TD Securities argue that resilient consumer demand, firm corporate profits, and sticky price pressures will preserve the Greenback's upward momentum.