USD Index: FOMC minutes and a strong economy should offer further support – ING

Data confirms the strength of the US economy and today's Industrial Production and FOMC minutes can only add fuel to the fire. The US Dollar is the clear winner here, economists at ING report.

More volunteers to support the USD

Industrial Production, after a 0.5% MoM drop in June, should show a return to 0.3% MoM growth in July in our view, in line with market expectations. Retail Sales already indicate 3% GDP growth in the third quarter in our view and estimates for Industrial Production are also supportive of another positive surprise, confirming the strength of the US economy, which would be more positive news for the US Dollar, of course.

The July Federal Reserve minutes should reflect the FOMC's hawkish efforts to combat dovish expectations. For now, this strategy is working perfectly. However, it is just a matter of time before the Fed uses up its ammunition and the market stops buying more hawkish news. For now, though, we remain in this mode for at least the next few days, which combined with the positive surprises from the economy, should continue to support the USD.

DXY should remain above 103.00 and test higher levels closer to 103.50 today as well.