Currencies calm ahead of next round of key US data

The US dollar has eked out small gains against some major currencies so far this week, leaving the DXY index just below 105 at the time of writing. During an otherwise quiet week, the February PCE data release out of the US tomorrow may add to the dollar’s strength if US inflation data continues to surprise to the upside. But “US exceptionalism”, which has underpinned the greenback’s strength this year, will be tested next week with key data releases – ISM surveys and non-farm payrolls – as well as speeches from the Fed’s Williams and Powell. In our view, the bar remains high for these data releases and speeches to boost the dollar substantially, but signs of continued economic resilience in the US could still keep the greenback on the front foot in the short term.