The dollar index (DXY00) on Tuesday rose by +0.63%. Tuesday’s weakness in stocks boosted liquidity demand for the dollar. Also, higher T-note yields on Tuesday strengthened the dollar’s interest rate differentials and were supportive of the dollar. In addition, Tuesday’s slump in the yen to a 1-month low on political risks in Japan is bullish for the dollar on a report that Liberal Democratic Party Secretary-General Moriyama intends to step down.
Limiting gains in the dollar were Tuesday’s economic reports, which showed the Aug ISM manufacturing index rose less than expected, and July construction spending declined for the third consecutive month.
