• The index adds to the positive start of the week above 102.00.
• US yields correct lower across the curve on Tuesday.
• Fed’s Harker, Trade Balance, Wholesale Inventories next on tap.

The USD Index (DXY), which gauges the greenback vs. a bundle of its main rival currencies, extends the optimism seen at the beginning of the week and maintains the trade above the 102.00 mark for the time being.

USD Index remains focused on US CPI

The index keeps the optimism well in place following the auspicious start of the week, always trading above the 102.00 hurdle and despite the now loss of momentum in US yields across different maturities.

The march north in the greenback comes amidst persistent weakness in the risk complex as well as increasing prudence among traders ahead of the publication of key US inflation figures on August 10.

The release of the US CPI for the month of July has grown in importance since Chief Powell emphasized the data-dependent stance from the Federal Reserve when it comes to decision on futures moves on interest rates.

So far, and according to CME Group’s FedWatch Tool, investors see the Fed keeping rates on hold for the remainder of the year. On this, NY Fed J. Williams (permanent voter, centrist) suggested on Monday that the Fed could reduce rates in early 2024.

In the US docket, Philly fed P. Harker (voter, hawk) is due to speak later in the session along with the publication of Balance of Trade, Wholesale Inventories, the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism index.