The dollar index (DXY) increased by 0.27% on Tuesday, driven by soaring Treasury note yields and a 5% surge in WTI crude oil prices, which raised inflation expectations and increased the likelihood of a Federal Reserve interest rate hike. Current market predictions estimate a 69% chance for a 25 basis point increase at the upcoming FOMC meeting on September 15-16.
Key economic data released on Tuesday showed the US ISM manufacturing index dropped to 54.6 in August, below expectations of 55.2, while construction spending fell by 0.5% month-on-month. Nonetheless, JOLTS job openings unexpectedly rose by 89,000 to 7.271 million, though still shy of expectations.
In the Eurozone, the August CPI rose 3.3% year-on-year, with core CPI reaching 2.4%. German July retail sales fell by 3.4%, the largest drop in five years. The markets are anticipating a 99% chance of a 25 basis point hike from the European Central Bank at its meeting on September 10.
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