The USD has staged a multi-week recovery to 94.10, a more than 300pt rally off of its September lows and for good reason. With 3.1% headline GDP for Q3, and on pace for 2.5% for the year, the Fed has recently put a December interest rate hike back on the table which has probably been the main catalyst for the USD. The 10-yr yield has climbed more than 30bps in the past month in light of the FEDs hawkish tilt, and the dollar has been in full pursuit. Furthermore, we’ve seen an epic climb in US stocks to all-time highs on the President’s tax reform policy. At the moment, there’s no end in sight to the bullish catalysts for the USD. Conversely, the Euro has struggled with sluggish growth and inflation data. We’re keeping a close watch on the most recent developments surrounding Catalonia’s quest for independence from Spain. Catalonian economic activity makes up 25% of Spanish GDP, hardly small potatoes. Taking all of this into account, and barring any unforeseen changes to the growth picture and tax reform policy, the dollar looks to retake control into year end.
Dollar Index Weekly Chart