Dollar Range-Bound as Fed Tightening Takes Center Stage

ING's Chris Turner suggests that despite resilient global equities and an above-consensus US jobs report, the Dollar should be stronger. However, risk appetite is capping gains.

The upcoming US CPI data on Friday is expected to sway the Fed towards a 25bp rate hike on September 16, with a 58% probability priced in currently. The US Treasury market will also be in focus due to $119bn auctions of three, 10 and 30-year bonds.

Turner highlights that higher energy prices and under-priced Fed tightening are expected to keep the DXY supported near-term around the 99.00 area. He notes that the inverse correlation between global equities and the dollar is currently the strongest, far higher than its link to oil prices.