The dollar index (DXY00) is up by +0.04% today. The weakness in stocks today has increased demand for dollar liquidity. Also, today's rally in WTI crude oil to a 3-week high is boosting 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% today.

The US July import price index ex-petroleum rose +0.3% m/m, stronger than expectations of +0.1% m/m.

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US July housing starts fell -12.4% m/m to 1.239 million, weaker than expectations of 1.345 million. However, July building permits, a proxy for future construction, rose +5.0% m/m to a 5-month high of 1.443 million, stronger than expectations of 1.375 million.

US July manufacturing production rose +0.2% m/m, right on expectations.

US July pending home sales fell -2.3% m/m, weaker than expectations of no change.

The markets are discounting a 35% probability of a +25 bp rate hike at the next FOMC meeting on September 15-16.

EUR/USD (^EURUSD) is up by +0.01% today. The euro is slightly higher today after the German Aug ZEW economic growth expectations survey rose more than expected to a 6-month high. Also, higher European government bond yields are strengthening the euro's interest rate differentials as the 10-year German bund yield rose to a 15-year high of 3.262% today.

Strength in the dollar today is limiting gains in the euro. Also, today's rally in crude oil prices to a 3-week high is bearish for the Eurozone economy and the euro, as Europe imports most of its energy.

The German Aug ZEW expectations of economic growth survey rose +7.9 to a 6-month high of 34.2, stronger than expectations of 30.0.

ECB Chief Economist Philip Lane said the pace of consumer price increases in the Eurozone is likely to hold "well above" the ECB's 2% target this year due to the Iran war.

The markets are discounting a 95% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

USD/JPY (^USDJPY) is up by +0.03% today. The yen tumbled to a 2-week low against the dollar today. Higher crude oil prices are weighing on the yen as WTI crude climbed to a 3-week high today, a bearish factor for Japan's economy and the yen, as Japan imports more than 90% of its energy. The yen was also under pressure today from higher T-note yields. Yen losses are limited as Japanese government bond yields climb, strengthening the yen's interest rate differentials. The 10-year Japan JGB bond yield rose to a 30-year high of 2.967% today.