OCBC’s FX Strategist Sim Moh Siong notes that the Dollar is consolidating after payroll-driven gains, with Asia FX diverging on policy signals and flows. The bank has removed its final Fed rate cut and now expects no easing through 2026, alongside higher 10Y yield forecasts. Stronger US growth versus Europe and non-tech Asia underpins a firm but rangebound USD, with risks skewed toward further strength.

Fed repricing supports firm Dollar

"The USD was quieter overnight, pausing after gains driven by a strong May US payrolls report that reinforced a hawkish Fed narrative."

"A stabilising US labour market gives the Fed room to focus on inflation. Attention now turns to the 10 June US CPI print for clearer signals on price pressures. "

"We have removed the final 25bp rate cut from our forecast and now expect the Fed to stay on hold through 2026. We also lift our 10Y US Treasury yield forecast to 4.55% by end 2026 from 4.25%."

"Stronger US growth relative to Europe and non-tech Asia supports a resilient USD. We expect the greenback to remain firm but broadly rangebound. Risks skew to further USD strength, supported by AI capex and potentially higher-for-longer energy prices."

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