A stronger dollar backdrop

Rising yields have led the dollar higher in the past week, fueled by higher oil prices, building rate hike expectations, and limited Treasury appetite. The net result is a DXY index trading over half a percent stronger as of writing late on Friday, albeit struggling to hold the 101 level. Against this backdrop, rate decisions from the SNB, Riksbank and Norges Bank were left to play a secondary role, as were flash September PMIs, aside from adding to the sense that upside inflation pressures continue to rise as Middle East hostilities remain top of mind.

The week ahead should see similar themes continue to dominate, with only one G10 central bank delivering a policy announcement. The RBA looks likely to hike rates on Tuesday – a decision we expect to be overshadowed. Instead, a raft of Fedspeak should focus on US rates, and on growing price pressures. The major data releases for the week ahead are set to add to this narrative as well, culminating in Friday’s US jobs report. If the data matches our expectations, it should help clear the way for a follow-up Fed rate hike later in October, matching our updated house call.

You can read the Week Ahead in full here:

Authors:

Nick Rees, Head of Macro Research

Barry van der Laan, Senior FX Market Strategist

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