Dollar Strength Endures on Rising Yields Despite Soft US Data
The US dollar continues to show strength in the market despite softer US data. According to ING strategists, this is due to rising long-dated US yields that weigh on global risk sentiment and support the currency.
The upcoming releases of September ADP payrolls and August personal spending and PCE inflation are expected to have a significant impact on the front-end rate sensitivity.
A 0.4% MoM core PCE print could potentially lift the probability of an October Fed hike, with pricing dropping to just below 50% after soft US consumer sentiment and JOLTS yesterday.
While some stabilisation in risk sentiment may take some shine off the dollar rally, today's data will have a big say. Markets are likely to place greater weight on the September CPI release in a couple of weeks.