US Dollar outlook remains balanced as strong labor data and equity performance offset potential downside risks from geopolitical developments.
TD Securities maintains a neutral short-term view on the US Dollar following the April US Consumer Price Index release. The firm cites resilient US labor market data and equity outperformance as factors limiting downside risks for the currency.
Analysts note that while reopening the Strait of Hormuz could weaken the USD, significant gains are unlikely unless US inflation reaccelerates or global demand weakens. Market reaction to the CPI print was muted due to soft core goods inflation and limited tariff passthrough.
The focus remains on central bank responses to inflation rather than growth impacts from current geopolitical conflicts. If core inflation stabilizes, global energy shocks may prompt only moderate rate adjustments for central banks with negative real rates.