The dollar index (DXY) rose by 0.55% on Tuesday, supported by a 5 basis point increase in the 10-year Treasury yield, which surpassed 5% for the first time in 1.5 months. The June Consumer Price Index (CPI) revealed a monthly increase of 0.3%, in line with expectations, while the year-over-year rate climbed to 2.7%, slightly above the 2.6% forecast.
U.S. Federal Reserve rate cut expectations shifted; now at 3% for the July 29-30 meeting and 57% for the September meeting, down from 65%. Positive trade news emerged with Treasury Secretary Bessent stating U.S.-China negotiations are progressing well, while President Trump announced a trade deal with Indonesia, though imports from there will incur a 19% tariff.
The euro (EUR/USD) fell 0.60% due to dollar strength alongside a decline in the 10-year bund yield, while Japan’s yen (USD/JPY) rose 0.78% amid pre-election concerns. Precious metals also dropped, with August gold closing down 0.67% as the dollar strengthened and trade news improved sentiment.
