The US Dollar has regained some of its recent losses as a result of a tech-led equity market plunge, which triggered a modest flight to safety, according to Brown Brothers Harriman’s Elias Haddad [1]. Haddad anticipates that the USD will edge somewhat higher over the next couple of months, supported by US economic outperformance, hawkish Federal Reserve rate expectations, and strong foreign demand for US long-term securities [1].
Recent US economic data points to continued resilience in consumer spending. US retail sales rose 0.2% month-over-month in June, in line with consensus estimates, compared to a 1.0% increase in May. The control-group sales, which exclude cars, gas, food services, and building materials, increased 0.5% month-over-month versus 0.8% in May. In real terms, retail sales remain solid, especially as headline CPI fell -0.4% month-over-month in June [1].
Market participants are also watching the July University of Michigan sentiment survey, due later today, with a particular focus on long-term inflation expectations to confirm whether they remain anchored [1]. Additionally, upcoming releases of US June housing starts, import and export prices, and industrial production data will contribute to the Atlanta Fed GDPNow model update. As of yesterday, the model estimates annualized US real GDP growth at 1.7% quarter-over-quarter in Q2, up from 1.4%, but down from the 4.3% peak in mid-May and below the 3.0% average since late April [1].
CONCLUSION
The US Dollar has stabilized on risk-off flows amid a tech-led equity selloff and resilient US economic data. Analysts expect the USD to edge higher in the coming months, supported by economic outperformance and hawkish Fed expectations. Market focus remains on upcoming data releases and inflation expectations for further direction.