US rates are helping the Dollar, while we wait for a new market theme to emerge, Kit Juckes, Chief Global FX Strategist at Société Générale, reports.

The Dollar is rising with US rates again 

“Absent a genuinely new driver, we have seen strong US data push up pricing of terminal Fed Funds and the dollar has reverted to rising in sync with real rates. Reviving an old relationship is fine for a while, but can only take the Dollar so far. We're still looking for a new story.”

“Current pricing looks for two or three 25 bps hikes by September, and it may take a bigger inflation scare than we saw in this week's CPI data, or another very strong labour market report at the start of March, to push them higher. Absent that, we will probably get stuck in a range again, before the next move (which we'd guess is more likely to be towards Dollar softness as growth resumes elsewhere).”