Dollar resilient despite turn in sentiment - BBH

Analysts at Brown Brothers Harriman explained that it took the market a few days to overcome the shockingly poor non-manufacturing ISM (51.4 vs. 55.5).

Key Quotes:

"However, by the end of the week, the US dollar bulls had regained the upper end.  The September Fed funds futures contract was implying a yield of 41.75 bp, up a quarter of a basis point from the September 2 close.  

Similarly, the 2-year yield was essentially unchanged on the week, while the 10-year yield was up 6 bp on the week and 15 bp from the ISM-inspired low.  At 1.66%, the 10-year yield is at its highest level since the UK referendum.  The Atlanta Fed GDP tracker has the US economy growing 3.3% this quarter, while the NY Fed's tracker says 2.8%.  This is after the adjustments taking into account this past week's data, including inventories and the service ISM.  

The US Dollar Index rebounded smartly off the trendline we have been monitoring.  It is drawn off the May, June and August lows.  It caught last week's low of almost 94.45.  Rebounding before the weekend, it stalled in front of 95.60, nearly meeting a retracement level of the pullback that began at the start of the month.  A move above 95.60 targets the 96.15-96.25 area that contains the August 31 high and the 200-day moving average.  Above there, the July high around 96.50 beckons."