The dollar index (DXY00) fell by -0.32% on Tuesday, falling back from Monday’s 1.5-year high. The widening of the US Aug trade deficit to a 17-month high was bearish for the dollar. Also, lower T-note yields on Tuesday weighed on the dollar. In addition, Tuesday’s rally in the S&P 500 and Nasdaq 100 to new all-time highs reduced demand for dollar liquidity.
Hawkish comments on Tuesday from San Francisco Fed President Mary Daly supported the dollar when she said she's concerned that AI spending, tariffs, and energy costs could keep inflation elevated longer, requiring more Fed tightening.
