US Dollar: Upcoming data to support hawkish Fed stance – BBH

Brown Brothers Harriman’s Elias Haddad notes the Dollar has eased from recent highs as lower Oil prices and comments from New York Fed President John Williams temper rate expectations. However, upcoming US August PCE and September ADP data are expected to show sticky inflation, stronger consumer spending and resilient labor demand, which BBH says should reinforce the Fed’s hawkish bias and support further USD strength.

Sticky inflation to bolster dollar

"USD is off its highs as the modest pullback in crude oil prices and New York Fed President John Williams’ call for patience tempered Fed rate hike bets."

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"Headline PCE is seen rising 0.3% m/m vs. 0.2% in July and be unchanged at 3.7% y/y."

"Bottom line: sticky US underlying inflation, a rebound in consumer spending, and resilient labor demand will reinforce the Fed’s hawkish bias."

"That should underpin the upswing in USD."

"Ahead of the PCE release, the September ADP private payrolls are seen at +72k vs. +38k in August (1:15pm London, 8:15am New York)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)