The dollar index (DXY00) dropped to a 2.5-week low today and is down by -0.15%. The dollar is under pressure today ahead of an announcement from the US Treasury on the size of Thursday’s buyback of long-term US Treasuries, a bearish factor for the dollar. Also, strength in the yen today is weighing on the dollar after US Treasury Secretary Bessent challenged traders to test his resolve on strengthening the yen.
Limiting losses in the dollar is today’s +2% jump in WTI crude oil to a 3.25-month high, which is boosting inflation expectations and could persuade the Fed to tighten monetary policy. Also, today’s increase in the 10-year T-note yield to a 2.75-year high of 4.82% has strengthened the dollar’s interest rate differentials.
