The dollar index (DXY00) is down by -0.24% today, falling back from Monday’s 1.5-year high. The widening of the US Aug trade deficit to a 17-month high is bearish for the dollar. Also, today’s -1% decline in WTI crude oil to a 1-month low eases inflation expectations and could potentially persuade the Fed to loosen monetary policy, a negative factor for the dollar. In addition, today’s rally in the S&P 500 and Nasdaq 100 to new all-time highs has reduced demand for dollar liquidity.
The US Aug trade deficit increased to a 17-month high of -$105.6 billion, wider than expectations of -$102.1 billion and likely to weigh on Q3 GDP.
