The US dollar struggled to find a specific direction on Tuesday as global investors kept a close eye on the Ukraine-Russia border crisis. US traders also combed through the latest economic data that came in better than what many experts had anticipated. Will these events help or hurt the greenback?
First, on the data front, the manufacturing and housing sectors recorded numbers better than what market analysts forecast.
In February, the IHS Markit manufacturing purchasing managers’ index (PMI) rose to 57.5, higher than the market projection of 56. This is also up from 55.5 in January.
The composite PMI advanced to 56, while the services PMI surged to 56.7.
All three PMI readings highlighted the same problems: raw material scarcity, labor shortages, higher prices, and supply chain disruptions. Also, suppliers’ delivery times increased and input buying growth swelled.
According to the Federal Housing Finance Agency (FHFA), housing prices rose at an annualized rate of 17.6% in December, unchanged from the previous month. The S&P/Case-Shiller Home Price Index surged 18.6% year-over-year in December, slightly higher than the median estimate of 18%.
The Conference Board’s Consumer Confidence Index eased to 110.5 this month, down from 111.1 in January.
Moreover, the Federal Reserve Bank of Richmond’s manufacturing index declined to 1 in February, down from 8 in January.
Now, when it comes to geopolitics, the situation is escalating in Eastern Europe after Russia officially supported two separatist regions in Ukraine. In response, President Joe Biden announced a series of sanctions and reiterated America’s commitment to working with NATO.
The White House noted that it has “no interest in war with Russia” and all the responses so far are for “defensive purposes.”
The US Treasury market was mostly in the green Tuesday, with the benchmark 10-year Treasury yield up 0.002% to 1.932%. The one-year bill jumped 0.087% to 1.08%, while the 30-year bond dipped 0.011% to 2.24%.
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, fell 0.07% to 96.01, from an opening of 96.08. The index is flat on the year.
The USD/CAD currency pair edged up 0.07% to 1.2763, from an opening of 1.2753, at 19:45 GMT on Tuesday. The EUR/USD surged 0.21% to 1.1336, from an opening of 1.1312.