US dollar marches on thanks to “higher for longer”

For the third week running, the dollar looks primed to notch up decent gains against most other major currencies. We don’t think newsflow regarding the US debt ceiling (which has swung from positive to negative and back this week) has had much bearing on the dollar on net, which has ground higher steadily throughout the week. Instead, its strength can be chalked up to changes in yield gaps, with US yields generally rising more than those elsewhere as investors re-embrace the “higher for longer” story.