MUFG says recent dollar gains driven by stronger U.S. data and cautious Fed minutes are unlikely to last. Political uncertainty and concerns about Fed independence under President Trump may keep investor sentiment toward the greenback fragile.
Summary:
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MUFG’s Derek Halpenny says recent U.S. dollar strength is unlikely to be sustained.
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Durable goods, housing and industrial production data all beat expectations.
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Fed minutes showed caution over further rate cuts, supporting the greenback.
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Halpenny argues dollar sentiment remains fragile under President Trump.
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Policy unpredictability and rhetoric around Fed independence weigh on outlook.
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National Economic Council Director Kevin Hassett criticised New York Fed tariff analysis.
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Halpenny sees such criticism as an example of potential White House interference risk
The U.S. dollar’s rebound following stronger-than-expected economic data and hawkish-leaning Federal Reserve minutes is unlikely to prove durable, according to MUFG Bank’s Derek Halpenny.
The greenback firmed after a run of upside surprises in key activity indicators. Data on durable goods orders, housing activity and industrial production all exceeded expectations, reinforcing the view that U.S. growth momentum remains resilient. In addition, minutes from the latest meeting of the Federal Reserve highlighted caution among policymakers over delivering further interest rate cuts, suggesting a more patient approach to easing.
While that combination typically supports the dollar through higher yield expectations and growth outperformance, Halpenny argues the broader backdrop leaves the currency vulnerable.
He contends that investor sentiment toward the dollar is likely to remain fragile as long as Donald Trump remains in office, citing policy unpredictability and recurring tensions around central bank independence. In his view, political noise risks overshadowing near-term data strength.
Halpenny pointed specifically to comments from National Economic Council Director Kevin Hassett, who criticised analysis from the New York Fed regarding tariffs
