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Higher oil and US yields bolster the dollar, USDJPY nears 160

OCBC says the dollar is supported by firmer oil prices, rising US yields, and resilient labor data, with USDJPY edging back toward 160 amid intervention risk.

Reported · Written up by our desk · Major Pairs

OCBC analysts Sim Moh Siong and Christopher Wong said the US dollar has regained support as markets reassess Federal Reserve tightening risks, pointing to higher oil prices, rising US yields, and resilient US labor data.

They noted that softer June inflation may keep the Fed patient, but continued US economic strength could eventually bring tightening concerns back into focus, supporting a moderately bullish USD outlook over the next one to two quarters.

FXStreet reported that the sharper rise in US yields versus Europe helped strengthen the dollar, and cited a media report that Fed Chair Warsh would be prepared to support a rate hike at the September meeting if inflation remains elevated.

For near-term fundamentals, the analysts highlighted initial jobless claims rising by 1,000 to 199,000, below the 205,000 consensus and staying under 200,000 for a third straight week, and said USDJPY has edged back toward 160, keeping possible intervention risks on the radar.

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