The US dollar continued to rise as US–G6 two-year yield spreads widened and recent activity data, alongside a steady labour market, kept Federal Reserve rate-hike expectations in focus. The narrative is tempered by the prospect of tighter policy elsewhere, which narrows monetary policy divergence and limits the scope for the currency to push to fresh cyclical highs.
US Economic Data and Labour Market Developments
In US data, the August manufacturing headline index fell to 54.6 versus a 55.2 consensus and 55.6 in July, while the Prices Paid index stayed at 71.1 against 70.8 expectations for a second month. The July JOLTS survey showed the hiring rate down 0.2ppt to 3.2%, the lowest since February, and the layoffs rate down 0.1ppt to 1.0%, within a 1.0–1.2% band seen over two years. Ahead, August ADP private payrolls are expected at +47k versus +44k, and the Fed Beige Book is due at 1:15pm London (8:15am New York) and 7:00pm London (2:00pm New York).
Global Bond Markets and Yield Dynamics
Global bond selling accelerated as crude strengthened, though 10-year government yields in most major markets remain below nominal GDP growth, with the UK and Japan singled out as exceptions.
