The firm US Dollar (USD) is consolidating its recent gains. Economists at Scotiabank analyze Greenback’s outlook.
The USD looks poised to remain firm in the near term but additional gains will need the support of higher US yields (10Y yields above the January highs around 4.20%, for example).
Macro drivers are positive for the USD. Economic Surprise data show US economic reports are running quite strongly ahead of expectations since the middle of January – more strongly than the Eurozone or Canada, for example. Stronger data support the high (but perhaps not higher) for longer outlook for US rates, at least.
The USD may hold close to current levels ahead of the US CPI data next week which will provide a little more direction for US yields in the short run.