Yield Surge Boosts USD Amid Hawkish Fed Rhetoric

US Treasury yields have been pushing higher due to resilient economic data and elevated energy prices. This increase in yields is supporting the US Dollar, while weighing on rate-sensitive assets.

According to OCBC strategists Sim Moh Siong and Christopher Wong, sticky inflation concerns are also contributing to the strong performance of the Greenback.

The key event risk for next week's market movement will be the US labour report. Bloomberg consensus expects non-farm payrolls to rise by 100,000 in September, down from 162,000 in August.

However, with initial jobless claims trending lower through the month, there is a growing risk of an upside surprise that could reinforce expectations for further Fed tightening and keep US yields elevated.