The dollar index (DXY00) on Tuesday gave up an early advance and fell slightly by -0.08%. The dollar turned lower on Tuesday after T-note yields gave up an early advance, weakening the dollar's interest rate differentials. Strength in stocks on Tuesday was bearish for the dollar as it reduced liquidity demand for the dollar. In addition, expectations for a Fed rate cut at next week's FOMC meeting are undercutting the dollar, as the swaps market now discounts a 96% chance of a rate cut at the Dec 9-10 FOMC meeting.
The dollar initially moved higher on Tuesday amid higher T-note yields, after the 10-year T-note yield rose to a 1.5-week high of 4.11%. Also, Tuesday's action by the OECD to boost its US 2025 GDP forecast was supportive for the dollar.
