For now, ‘higher for longer’ is driving thinking about Fed policy and supply is helping push yields higher. That props up the Dollar while recession fears haunt the Euro (and Sterling) and Chinese growth fears anchor more currencies than just the Yuan.

While currency markets remain in a summer lull, the Dollar is still (comfortably) the pick of the bunch. It has gone up against everything in August and will go on rising until either the situation in China improves (very unlikely), the BoJ acts (they don’t have a meeting again until September 22nd), the European data turnaround (also unlikely) or the US story shifts on the back of weak data and/or a more cautious tone from Fed officials at Jackson Hole).

With payroll data and the ISM report due on Friday, September 1, I wouldn’t blame anyone who heads back to the beach for a few more days.