The dollar index (DXY00) is up by +0.23% today. The dollar is moving higher today on signs of strength in the US economy after July personal spending and income rose more than expected and Q2 personal consumption was revised upward. Higher bond yields today have also strengthened the dollar’s interest rate differentials.
Gains in the dollar are limited after July capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose less than expected. Also, the July core PCE price index, the Fed's preferred inflation gauge, advanced in line with expectations, a dovish factor for Fed policy. In addition, WTI crude oil is down more than -1% today at a 1.5-week low, which lowered inflation expectations and could persuade the Fed to loosen monetary policy, a negative factor for the dollar.
