
The dollar index (DXY00) Tuesday rose +0.54% and posted a 5-1/2 month high. Weakness in stocks Tuesday boosted liquidity demand for the dollar. Also, higher T-note yields Tuesday strengthened the dollar’s interest rate differentials. In addition, weaker-than-expected economic news Tuesday from China and the Eurozone have boosted the relative optimism in the U.S. economy and the dollar.
U.S. economic news Tuesday supported the dollar after July factory orders fell -2.1% m/m, the biggest decline in 8 months but stronger than expectations of a -2.5% m/m drop.