The US dollar closed Tuesday little changed against major currencies, with EUR/USD barely moving near 1.1540. Stocks finished mostly lower and Treasury yields edged down as fading optimism over a possible U.S.-Iran deal weighed on sentiment. Traders now turn to Wednesday's U.S. CPI report for the next signal on the Fed's September decision.
The dollar stayed largely rangebound against its major peers on Tuesday, leaving EUR/USD little changed at -0.02% near 1.1540. Trading was thin across the board as investors held back ahead of the next big catalyst.
Dollar holds narrow ranges across major pairs
Most currency pairs saw only modest moves during the session. USD/JPY traded near 159.29, virtually unchanged on the day, while GBP/USD ticked marginally higher near 1.3504. The Swiss franc lagged, with USD/CHF near 0.8108, up 0.07%.
Commodity currencies were mixed. USD/CAD traded around 1.3925, with the Canadian dollar slightly stronger by 0.10%, while the Australian dollar gained about 0.11% to 0.7060. NZD/USD was near unchanged, down 0.03% near 0.5879.
Stocks slip and yields ease as Iran optimism fades
Fading hopes for a U.S.-Iran agreement and continued uncertainty around the Strait of Hormuz weighed on risk appetite. The Nasdaq composite fell 0.60% to 26,445.45, leading declines, while the S&P 500 dropped 0.32% to 7,728.18. Technology names bore the brunt of the selling, but small-caps bucked the trend.
Treasury yields also eased, though the moves were modest. The 10-year yield slipped 0.6 basis point to 4.6924%, while the 2-year fell 1.9 basis points to 4.220%. The inflation outlook stayed in focus as Chicago Fed President Austan Goolsbee said prices and affordability remain the biggest problem facing the economy, describing the labor market as stable but not particularly good.
CPI report looms Wednesday
Attention now shifts to Wednesday's CPI report at 8:30 AM ET. Headline inflation is expected to rise 0.1% month over month and 3.4% year over year, while core CPI is forecast to ease to 2.5% from 2.6%. The reading carries weight for the dollar and Treasury yields alike, since it feeds directly into expectations for the Fed's September interest rate decision.
A hotter-than-expected print would likely revive bets on further Fed tightening, while a softer number could offer relief to bonds and equities.
Source: investingLive
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