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- Barring a data surprise, the only threat to strong Dollar story comes from quarter-end rebalancing flows – ING
Barring a data surprise, the only threat to strong Dollar story comes from quarter-end rebalancing flows – ING
Dollar strength emerged across the board yesterday. It is hard to argue with the strong Dollar, economists at ING report.
Strong data goes head-to-head with rebalancing flows
May's core PCE deflator is expected at a firm 0.3-0.4% MoM, consistent with the Fed's view that core inflation is not falling quickly enough. That should keep US rates and the Dollar firm.
The challenge today will be month and quarter-end portfolio rebalancing flows. The outperformance of US equity benchmarks over the last month and quarter could generate some Dollar selling. We prefer to see rebalancing as more of a risk to a preferred view that the Dollar stays strong given what seems a clear macro story.
DXY could edge up to the 103.65 area unless fixing flows take their toll.
See – US Core PCE Bank Expectations: Fed preferred inflation measure to make little progress
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