Sticky US inflation and resilient growth reinforce expectations of prolonged Fed tightening, curbing dollar weakness risks.
OCBC Bank strategists argue Treasury buybacks alone are unlikely to weaken the USD sustainably without Fed support to cap yields. Recent data, including July core PCE inflation at 0.2% MoM and 3.3% YoY, align with expectations but keep annual price pressures elevated, supporting a hawkish Fed bias.
Inflation remains above the Fed’s 2% target, reducing scope for fiscal-monetary coordination. Markets are watching Jackson Hole for signals on the Fed’s inflation-fighting commitment, with potential pushback against debasement concerns likely to bolster the USD.
Strategists maintain a neutral stance on the USD, citing limited downside until clearer evidence of Fed policy shifts emerges.