The dollar index (DXY00) on Tuesday rose by +0.12%. The dollar recovered from early losses on Tuesday and posted modest gains as weakness in stocks boosted liquidity demand for the dollar. The dollar also garnered some support Tuesday after S&P Global Ratings affirmed its AA+ long-term rating and A-1+ short-term rating on US debt and said the US can maintain its credit strength despite the fiscal hit of its recent spending bill because tariff revenues will "generally offset weaker fiscal outcomes."
Lower T-note yields on Tuesday were bearish for the dollar. Also, signs of progress in peace talks over Ukraine are curbing safe-haven demand for the dollar. Losses in the dollar are limited due to concern that last week's stronger-than-expected July CPI and PPI reports could keep the Fed from cutting interest rates at next month's FOMC meeting.
