US Dollar: Growth edge narrative supports gains – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad notes the Dollar is extending gains as US economic data and policy dynamics remain supportive. September US PMI is expected to confirm US growth leadership versus Eurozone, UK and Japan. A scheduled US Treasury buyback in the 20–30-year sector may steady long yields, though sustained relief depends on lower Oil prices.

Dollar extends gains on US outperformance

"USD continues to grind higher against all major currencies in line with widening interest rate differentials. While tightening by other major central banks limits policy divergence with the Fed, US economic outperformance should keep the dollar supported. Today’s September S&P Global PMI readings will likely show the US maintaining its growth edge over the Eurozone, UK, and Japan."

"The US Treasury liquidity support buyback operation in the 20-to-30-year sector is scheduled today. The bond market backdrop is somewhat calmer now than at the September 9 operation, when a $6bn Treasury buyback in the 10-to-20-year sector failed to stop yields rising. Today’s buyback may further steady the long end of the curve, but lasting relief will require oil prices to pullback further."

"Brent crude oil prices firmed up after dropping the past five days but are holding just under $100 a barrel. Restoration of flows from Saudi Arabia's East-West pipeline and US-Iran diplomacy hope are keeping energy prices in check. US President Donald Trump said that envoys Steve Witkoff and Jared Kushner had “a very good meeting” with members of the Iranian delegation."