Dollar Rebounds as Markets Price in Higher Chance of Fed Hike

The US dollar is tentatively re-establishing a positive correlation with long-end yields, helped by a smaller-than-expected $6bn Treasury buyback announcement.

Markets are pricing in 18bp for next week's FOMC meeting, and a hawkish ECB has reduced downside risks for the EUR/USD.

CPI can seal the deal on a Fed hike with even a marginal upside surprise, consensus stands at 0.2% month-on-month for core and 0.4% for headline.

The National Bank of Poland delivered no surprises yesterday, while the governor remained dovish relative to peers, market pricing and the global backdrop.