US data accelerates laying groundwork for USD

The dollar struggled once again in June despite signs that US data was turning a corner amidst a continued rise in German sovereign yields and unwind of USD longs. However, solid US fundamentals are driving USD strength as the year progresses. 

In particular, non-farm payrolls growth remains at a healthy 236,000 pace (6m avg), wage expectations are accelerating , and retail sales rebounded. Chair Yellen communicated she would like to see more 'decisive evidence' of growth before raising rates in the June meeting, a slightly higher bar than before, but September remains the base case. 

"With the market pricing a roughly 45% chance, and only 1 hike in 2015 (versus our call for 2), the USD will be supported as market expectations shift toward our view",says BofAML Research.