The US dollar weakened as investors continued to pour into equities, lifting the tech-heavy Nasdaq Composite Index to an all-time high. The greenback has been little changed over the past week, with traders monitoring Federal Reserve policy expectations. The buck has still turned out a strong performance in the first half of 2024 and could find further support in a higher-for-longer rate environment.
The US Dollar Index (DXY), a gauge of the greenback against a basket of currencies, tumbled 0.11% to 104.48, from an opening of 104.58. The greenback is down 0.21% over the last week but remains up more than 3% year-to-date.
In global forex markets, the buck has been one of the top-performing currencies this year. Investors have been taking refuge in dollar assets in a climate of higher interest rates and intense liquidity.
Minneapolis Fed Bank President Neel Kashkari said on Tuesday that he wants to see “many more months” of positive inflation data before he can agree to slash interest rates. He has also noted that he would not dismiss the idea of further policy tightening if price pressures persist or rise.
But the dollar’s ascent has taken a breather as investors weigh the next monetary policy decisions. Meanwhile, the US stock market keeps hitting new records. The latest occurred on Tuesday when the Nasdaq climbed to a new high, buoyed by Nvidia shares popping.
Meme stocks, including GameStop, ballooned as traders returned from the Memorial Day holiday.
“GameStop’s at-the-market program, announced earlier this month, allowed its bank to create shares for sale, boosting the company’s cash reserves to around $1.1 billion. This influx is earmarked for general corporate purposes, including potential acquisitions and investments,” said Giuseppe Sette, the president of market research firm Toggle AI.
“Despite this financial maneuver, GameStop’s core business remains challenged. With gamers increasingly opting for digital downloads over physical stores, the company has struggled. Recent operational updates revealed net sales falling short of estimates as the company focuses on cost-cutting measures.”
US Treasury yields were mixed, with the benchmark ten-year yield picking up 3.3 basis points to 4.506%. The two-year yield dipped below 4.95%, while the 30-year bond surged 4.8 basis points to 4.625%.
The USD/CAD currency pair was flat at 1.3635 at 16:36 GMT on Tuesday. The EUR/USD advanced 0.16% to 1.0876, from an opening of 1.0860.