OCBC’s strategists Sim Moh Siong and Christopher Wong keep a neutral stance on the US Dollar (USD), expecting a firm but rangebound USD profile as resilient US growth and sticky inflation support the currency.
A potential US–Iran deal that reopens Hormuz is seen as USD-negative via lower Oil prices, though US outperformance should limit downside
Neutral stance with firm Dollar bias “We remain neutral on USD, expecting a firm but rangebound profile. The Fed is moving away from an easing bias as US growth holds up and inflation stays sticky. This supported a gradual grind higher in the USD over the past few weeks.” “Following the strong ISM manufacturing data overnight, this week’s data – including ISM services and payrolls – should reinforce the US growth resilience narrative.
Fedspeak points to a shift toward a neutral stance at Chair Warsh’s first FOMC meeting ” “A potential US-Iran deal reopening the Strait of Hormuz would be USD-negative via lower oil prices, but downside should be limited by US outperformance. Our base case sees Middle East oil flows rising beyond mid-year, with prices easing into 2H26, albeit gradually. We expect Brent near USD80/bbl by year-end, with upside risks.