US Dollar Strength Driven by Rising Treasury Yields and Hawkish Fed Comments

US Treasury yields are driving up the value of the US Dollar, according to OCBC strategists Sim Moh Siong and Christopher Wong. Resilient economic data, sticky inflation, and high energy prices are behind the rising yields, which in turn support the Greenback.

The market is looking forward to next week's labour report, with consensus expecting non-farm payrolls to increase by 100,000 in September, down from 162,000 in August. However, falling jobless claims have raised the chance of an upside surprise that could reinforce expectations for further Fed tightening.

Recent comments from Fed officials have also been hawkish, with New York Fed President Williams and Cleveland Fed President Hammack warning that inflation risks remain skewed to the upside. Philadelphia Fed President Paulson added that 'modest further tightening' may still be warranted if inflation fails to moderate.