Michael Woolfolk Rate Quotations

Given the recent spate of positive January data, CPI and durable goods are unlikely to disappoint. The USD is positioned to make new gains ... as favorable U.S. growth and interest rate differentials weigh on market sentiment.

There are strong economic fundamentals backing not only the U.S. economy but the U.S. dollar right now. We are likely to get two more rate hikes.

Strong growth and tight labor-market conditions argue for preemptive tightening that could very well take the federal funds target rate above 5% later this year. This is viewed as a dollar positive.

Interest rate differentials are supporting the U.S. dollar for the time being. Until the Fed pauses, it looks that's going to provide support for dollar bulls.

The hike in March is fully priced in. The hike in May is over 80% priced in. There is already talk of continued hikes after that. Interest rate differentials globally are increasingly favoring the U.S. and it's positive for the dollar.

The dollar rally after the non-farm payrolls report underscores the continued importance of labor market tightness with respect to interest rate expectations.

The door will be left open for future rate hikes but the Fed will be increasingly data-dependent. That's positive for the U.S. dollar.