The US Dollar (USD) is showing divergent behavior against counterparts depending on their risk profile, according to Strategists at BBH. 

Whilst it is mostly falling against commodity currencies due to an improved outlook for global growth, it is rising against safe-haven’s like the Japanese Yen (JPY) and the Swiss Franc (CHF).

A Tale of Two Dollars 

“USD is under downside pressure mostly against commodity-sensitive currencies. NOK, SEK, AUD, and NZD are the top performing major currencies versus USD this week. China’s modest cyclical recovery and improving global manufacturing sector growth momentum (the global manufacturing PMI rose to a 20-month high at 50.6 in March) bode well for the commodity complex.”

“USD is firm against low yielding currencies (JPY and CHF) underpinned by high US Treasury yields.”

“Slower US service sector growth momentum in March has kept odds of a June Fed funds rate cut well in play (over 60% priced-in) and curtailed broad USD strength.”