Dollar enjoys a broad rally

The US dollar is on track to end the week stronger against most other major currencies thanks largely to investors further paring back their expectations for Fed rate cuts. Although political developments have dominated the headlines this week, they have had little bearing on markets; instead, this reassessment of rate expectations has been driven by a raft of macro data which has, on net, signalled that the US economy is still doing fine despite the slowdown in employment growth. This lends support to our view that the Fed will cut by less than is discounted over the coming year or so, helping the greenback rally a little further over 2025.