ING strategists maintain a bullish outlook on the US Dollar as hawkish Fed commentary and strong inflation data push the DXY to April 2025 highs, with tomorrow's PPI release eyed as a potential catalyst for further gains.
ING strategists see continued upside risks for the dollar after a US CPI beat and hawkish Fed rhetoric pushed DXY back to April 2025 levels, with real front-end rate differentials driving momentum. Chris Waller has put a 50bp December move on the radar while December pricing sits at just 28bp, leaving room for hawkish repricing. Tomorrow's PPI is flagged as the catalyst for another USD leg higher.
The US Dollar Index (DXY) has climbed to April 2025 levels, fueled by a recent US CPI beat and hawkish rhetoric from Federal Reserve officials. ING strategists highlight that real front-end rate differentials are driving this momentum, with the market currently pricing in only 28bp for a December rate move, leaving room for further hawkish repricing.
Hawkish Fed rhetoric and a US CPI beat earlier this week have pushed the DXY back to April 2025 levels, and real front-end rate differentials continue to fuel dollar momentum, with ING seeing upside risks in the coming days.
Tomorrow's PPI is seen as the likely catalyst for another dollar leg higher; today's home sales data are considered unlikely to matter.