USD: Data risks support Dollar gains – ING

ING’s Francesco Pesole notes fading optimism on US–Iran talks and rising Oil prices are reinforcing support for the Dollar, with Brent near $107 and equities at risk from rapidly rising rates. He sees upcoming US consumer confidence and JOLTS data as key for Dollar direction.

Dollar supported by Oil and data risks

"Brent touched $109/bbl yesterday (now $107), delivering another blow to the bond market. For now, equities have suffered some knock-on effect but are absorbing the shock quite well, but the risks are that high valuations reach a risky tipping point with rates rising so rapidly. It’s a tail risk that is getting fatter, and one that would be associated with big dollar gains."

"Today’s calendar should start to force US data back into the discussion. September consumer confidence is expected to stabilise around 89. JOLTS will offer more nuance to the August jobs picture."

"We need to see some stability in bonds for the Dollar to correct lower. That relies heavily on Oil, and the latest news isn’t encouraging. Upside risks are rising again for the greenback."