The dollar index (DXY00) rose by +0.10% on Tuesday. The weakness in stocks on Tuesday increased demand for dollar liquidity. Also, Tuesday’s rally in WTI crude oil to a 3-week high boosted inflation expectations and could prompt the Fed to tighten monetary policy, a positive factor for the dollar. In addition, rising T-note yields are strengthening the dollar’s interest rate differentials as the 10-year T-note yield rose to a 1.5-year high of 4.75% on Tuesday. US economic news on Tuesday was mixed for the dollar.
The US July import price index ex-petroleum rose +0.3% m/m, stronger than expectations of +0.1% m/m.
