US Dollar Surges on Higher Yields and Resilient Labour Market
US Dollar gains momentum on higher oil prices and rising US yields.
According to OCBC's Sim Moh Siong and Christopher Wong, increased optimism over a potential reopening of the Strait of Hormuz has faded, causing firmer oil prices to support the USD. Global yields have also moved higher overnight, further bolstering the dollar.
The stronger US labour market is another key factor contributing to the renewed dollar strength. Initial jobless claims rose just 1k to 199k in the latest data, beating expectations and remaining below 200k for a third consecutive week.
While softer June inflation has given the Federal Reserve scope to remain patient, OCBC believes continued US economic resilience should eventually refocus tightening concerns, keeping the USD moderately bullish over the next one to two quarters.