Dollar heads for best week since February as hawks linger

BLOOMBERG

The greenback is set for its biggest weekly gain in nearly five months as bullish traders offered respite for a currency that has been battered in July.
A Bloomberg gauge of the dollar’s strength advanced more than 1% in the five-day stretch as the greenback clawed its way back from the 15-month lows it touched amid last week’s selling frenzy. The Bloomberg Dollar Spot Index is now down roughly 1.4% for month.
“The narrative has shifted back in the dollar’s favour, at least for now,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. “What’s noteworthy is that the relative story has changed from both sides. Developments in the eurozone, UK, and Japan have called the hawkish central bank outlooks there into question even as strong data here in the US support the hawkish Fed outlook.”
With a rate increase from the Fed all but assured — at least according to pricing in the swaps markets — investors are turning their focus to any guidance on whether the central bank has reached the peak of its tightening cycle or if more hiking could be in store. Yields on 10-year Treasuries slipped over one basis point to 3.84%.