US Dollar: US data keep support in place – Societe Generale

Societe Generale's assessment, as reported by FXStreet, is that recent US economic data continue to provide support for the US dollar. The transmission mechanism runs through rate differentials: firmer US data reduce the likelihood of near-term Federal Reserve easing relative to other central banks, keeping US yields attractive and sustaining capital inflows into dollar-denominated assets. The dollar index and dollar pairs such as EUR/USD, USD/JPY and GBP/USD are the most directly exposed, while rate-sensitive segments like US Treasuries at the front end of the curve also reprice as expectations shift. Traders should watch the next US nonfarm payrolls release and the monthly core PCE inflation print, since a hotter reading would reinforce the dollar's yield advantage, whereas a soft one could quickly erode the support.

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