Dollar Strengthens as Fed Tightening Risks Reassert Themselves

The US dollar has seen renewed support due to higher oil prices, rising US yields, and resilient US labour data. According to OCBC's Sim Moh Siong and Christopher Wong, these factors are keeping the Federal Reserve's tightening risks in focus.

While soft June inflation has allowed the Fed to stay patient, the analysts argue that continued US economic resilience will eventually refocus attention on tightening concerns. This is expected to keep the USD moderately bullish over the next one to two quarters.

The strengthening of the dollar was also supported by firmer oil prices and a rise in global yields. The USDJPY pair edged back towards 160, keeping intervention risks on the radar.