OCBC Bank strategists Sim Moh Siong and Christopher Wong highlight that the US Dollar (USD) remains supported by its yield advantage and safe-haven status, with FX moves still fitting the USD smile framework. They expect modest USD appreciation by year-end, but notes near-term upside is likely incremental without fresh catalysts, keeping carry trades attractive as funding choices become more important.
Yield support and safe-haven demand
“The USD remains the highest-yielding safe-haven currency in the G10 complex. Near-term FX price action is likely to continue reflecting the “USD smile” framework, under which the greenback tends to outperform when markets price either stronger US growth and higher rates or a rise in global risk aversion.”
“While we continue to expect modest USD appreciation by year-end, near-term upside is likely to remain capped without a fresh catalyst. Such an…
