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Fed hawkishness and strong US data lift the dollar broadly
The US September composite PMI rose to 58.4, and the US 10-year Treasury yield jumped to 5.14%.
The US dollar rose broadly against major currencies as a hawkish Federal Reserve stance and strong US economic performance bolstered the currency, according to Brown Brothers Harriman’s (BBH) Elias Haddad.
BBH pointed to September PMI data that significantly beat other major economies, saying the US composite PMI climbed to a 62-month high of 58.4 versus 55.3 consensus, with services growth quickening and manufacturing rising to a 53-month high.
The firm also linked dollar strength to higher real Treasury yields tied to robust private sector growth, noting the US 10-year Treasury yield surged to 5.14%, its highest level since July 2007.
BBH added that an extended US-China trade war truce kept geopolitical risk in focus, with Treasury Secretary Scott Bessent confirming the truce was extended from an expiration date of November 10 to January 10, while questioning whether a larger deal with China is achievable.