Will strong US data keep the dollar supported?

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Strong US Economic Data Provided a Mixed Signal for Dollar Support

The ringgit opened marginally lower against the US dollar on Friday, influenced by stronger-than-expected US economic data that initially boosted the greenback. However, the US Dollar Index (DXY) subsequently fell, suggesting that the rally in the dollar might not be sustainable. This mixed performance was further shaped by geopolitical developments, specifically the reopening of the Strait of Hormuz, which improved market risk appetite and limited the ringgit's decline.
US First-Quarter GDP Exceeded Expectations

The United States reported a first-quarter gross domestic product (GDP) growth of 2.1 per cent, surpassing the consensus forecast of 1.6 per cent. This figure indicated a more robust economic performance than anticipated, contributing to an initial strengthening of the US dollar.
PCE Inflation Aligned with Market Expectations

In May, the personal consumption expenditures (PCE) inflation rate stood at 4.1 per cent, which was in line with market expectations. While this data point provided a measure of inflation, it did not significantly alter the market's view on the US dollar's trajectory, as it matched forecasts.
Expert Analysis Suggests Dollar Rally May Not Be Sustainable

Despite the positive GDP figures, an expert noted that the US Dollar Index (DXY) fell 0.18 per cent to 101.431 points after the PCE data release. This observation, coupled with the context of lower crude oil prices and a 60-day timeline for peace deal negotiations between the US and Iran, led to the suggestion that the dollar's rally may not be sustainable. The expert pointed to two consecutive quarters of sub-one per cent growth in consumer spending, implying anaemic growth in this key economic driver.

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Will strong US data keep the dollar supported?

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