The dollar index (DXY00) on Tuesday rose by +0.03%. The dollar posted slight gains on Tuesday on some mild short covering after last Friday’s and Monday’s losses. Higher T-note yields on Tuesday were supportive of the dollar. Also, Tuesday’s news that showed the US Jun trade deficit shrank to a 1.75-year low was bullish for the dollar.
The dollar gave up most of its advance Tuesday after the Jul ISM services index unexpectedly declined. Also, dovish comments late Monday from San Francisco Fed President Mary Daly were bearish for the dollar when she said the time is nearing for Fed interest rate cuts with the labor market softening and no signs of tariff-induced inflation. The dollar still has a negative carryover from last Friday’s weaker-than-expected US payroll and ISM manufacturing reports, which bolstered speculation that the Fed may cut interest rates as soon as next month.
