Sizing Dollar Data Risk
The greenback has not yet fully achieved high-beta status, but last week’s heavy dollar buying to ride the rise in yields had already rendered the currency vulnerable to positioning risk and data weakness will be the most convenient trigger for a correction – a hallmark of a risk currency. Nonetheless, we caution against counting exclusively on data in search of reversals. The dollar has navigated Monday’s weak ISM number, and even if Friday’s data prints lead to a correction in the dollar with risk, we doubt it will change the bigger picture, as we see several reasons not to overstate the dollar’s data risk in the immediate future.
Read the full report: UBS