The U.S. dollar index (DXY) fell by 0.06% on Tuesday, as the dollar weakened following disappointing economic data. July new home sales dropped 10.5% month-over-month to 607,000, below expectations of 620,000. Additionally, the August consumer confidence index declined to 89.4, its lowest in seven months, against forecasts of 90.2. Concurrently, WTI crude oil prices plunged 3%, pushing U.S. inflation expectations lower and influencing Federal Reserve policy discussions.
In the Eurozone, the euro gained 0.10%, aided by better-than-expected economic reports, including an upward revision of German Q2 GDP to 0.3% quarter-over-quarter and a 1-year high in the August IFO business climate survey at 88.8. The markets anticipate a 95% probability of a 25 basis point rate hike from the European Central Bank at its upcoming meeting on September 10.
In Japan, the yen maintained some support amid expectations of a Bank of Japan rate hike, with an 80% chance for a 25 basis point increase by September 18. Despite ongoing pressure from low interest rate differentials, the yen’s losses were mitigated by a 3% drop in crude oil prices, which benefit Japan’s energy-importing economy.
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