Brown Brothers Harriman’s (BBH) Elias Haddad notes the Dollar has extended its broad gains to a 19‑month high as Fed funds rate hike expectations push Treasury yields higher. He highlights robust US growth, a strong labor market and sticky inflation as keeping the USD bias higher, with October PPI data seen as potentially reinforcing Fed hike bets and supporting the Dollar.

Dollar strength tied to Fed repricing

"USD extends this week’s broad gains to a fresh 19-month high as the sharp upward adjustment to Fed funds rate hike expectations lift Treasury yields."

"The USD rally may look stretched in the near-term, but robust US growth, favorable labor market conditions and sticky underlying inflation keep the bias tilted higher."

"The US October PPI is up next (1:30pm London, 8:30am New York). Focus will be on the PPI components that feed into core PCE, particularly Airline Passenger Services and PPI Services less Trade, Transportation, and Warehousing. A hot PPI print reinforcing October’s strong CPI reading could further bolster Fed rate hike bets and underpin USD."

"One fewer scheduled rate decision could amplify market moves around meetings and increase sensitivity to data between them."

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