• The US Dollar extends gains on Friday, trading at the strongest level since mid-November.  
• Traders are pushing the Greenback higher as the interest-rate divergence between the Fed and other central banks looms large.
• The US Dollar Index rallies towards 106.00.

The US Dollar (USD) continues to strengthen on Friday and is set for the best week this year so far, snapping out of the tight bandwidth it had traded this 2024. Investors don’t seem to be taking profits despite the recent rally,  which could mean that more US Dollar strength is on the cards for next week. The main driver for the move is the breakdown in European bonds, with yields sinking against very steady ones in the US, as the rate differential between both sides of the Atlantic expands. 

On the economic data front, traders are starting to applaud good data under the label of US exceptionalism. Equities could well be set to rally as well despite higher interest rates, buying the idea that there is no landing taking place in the economy and that the current level of high rates is even good to keep it from overheating.  The University of Michigan numbers this afternoon could build up a case further for the above narrative.