US Dollar Index remains below 104.50 despite increased yields and a risk-off mentality.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six other major currencies, regained its daily losses and was trading around 104.30 during early European hours on Tuesday. The higher US Treasury yields help to strengthen the greenback, with 2-year and 10-year yields on US Treasury notes at 4.52% and 4.25%, respectively, at the time of writing.
The improvement in US Treasury yields may help to boost the greenback.
The US dollar (USD) is under pressure as forecasts The Federal Reserve (Fed) is expected to lower interest rates in September. Last week, Fed Chair Jerome Powell stated that the three US inflation readings this year “add somewhat to confidence” that inflation is on pace to hit the Fed’s target on a sustained basis, hinting that interest rate cuts may be on the way.
Additionally, Federal Reserve Bank of New York President John Williams stated on Friday that the long-term factors that led to lower neutral interest rates prior to the epidemic remain in force. Williams added, “My own Holston-Laubach-Williams estimates for r-star in the United States, Canada, and the Euro area are about the same level as they were before the pandemic,” according to Bloomberg.
Vice President Kamala Harris had garnered support for the front-runner for the presidential candidacy.
In US politics, Democrats united around Vice President Kamala Harris, the leading candidate for The presidential nomination. According to NBC News, Harris had received endorsements from the vast majority of the Democratic Party’s pledged convention delegates. The nomination criterion is 1,976 delegates, and NBC estimates that Harris has 1,992 delegates’ backing, either through oral or written endorsements.
Traders will most likely be watching for the Global Purchasing Managers Index (PMI) and Gross Domestic Product (GDP) data releases later this week. These numbers may provide new insights on the economic conditions in the United States (US).
