USD: Data support but structural risks linger – OCBC
|OCBC’s FX strategists Sim Moh Siong and Christopher Wong say stronger US non-farm payrolls reinforce a stabilising US labour market, allowing the FOMC to stay patient on rate cuts and limiting near-term Dollar downside. However, they stress that Fed succession uncertainty and broader US policy risks mean further Dollar gains will need additional positive data surprises.
Stronger NFP offsets structural policy risks
"January NFP surprised to the upside with a 130k gain (consensus: 65k), supported by broader sectoral job growth."
"The unemployment rate edged down to 4.3% from 4.4%, alongside improvements in the underemployment rate — developments that should ease Fed concerns over labour-market softness."
"Stronger-than-expected US non-farm payrolls reinforce our view that a stabilising labour market, which gives the FOMC room to stay patient on rate cuts, should limit deeper USD losses."
"However, structural drags — Fed succession uncertainty and broader US policy risks — mean the USD will still need additional upside surprises in upcoming data to sustain any rebound."
"Improving global growth prospects and the continued outperformance of non-US equities keep the case for USD weakness alive, especially against commodity-linked currencies like AUD and NZD, as well as high-yielding EM FX."
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