The US dollar strengthened on Tuesday as investors attempted to seek shelter from the widespread losses in the financial markets. The greenback has taken a breather in recent sessions, but it is still one of the top-performing assets this year. Data was also front and center.
The S&P Global manufacturing purchasing managers’ index (PMI) fell to 57.5 in May, down from 59.2 in April. This matched the market forecast. The composite PMI dropped from 56 to 53.8, while the services PMI declined from 55.6 to 53.5.
All three PMI readings spotlighted the same trends: higher cost pressures, strong employment numbers, and slowing output and order growth.
In a similar economic measurement, the Federal Reserve Bank of Richmond’s manufacturing index plummeted to -9 in May. Manufacturing shipments index plunged to -14, and the services index slipped to 8.
The housing market eased considerably, despite the busy spring buying season. New home sales cratered 16.6% in April, totaling just 591,000 sales. In March, new home sales fell 10.5% with 709,000 residential transactions.
For the rest of the week, durable goods orders, Fed minutes from the May Federal Open Market Committee (FOMC) meeting, and personal income and spending data will be released.
Meanwhile, inflation continues to be in focus in the US economy, tipping the S&P 500 into a bear market last week. The institution has suggested that it will raise interest rates by 50 basis points at next month’s rate-setting Committee policy meeting.
Former Fed Chairman Ben Bernanke told the Brookings Institution that he is confident the central bank “will bring inflation down over the next couple of years.”
The US Treasury market was mostly in the red, with the benchmark 10-year yield down 11.6 basis points to 2.743%. The one-year bill slid 5.8 basis points to 2.022%, while the 30-year bond shed 9.1 basis points to 2.975%.
The US Dollar Index (DXY) declined 0.41% to 101.66, from an opening of 102.11. The index, which gauges the greenback against a basket of currencies, has weakened nearly 2% over the last week, lowering its exceptional year-to-date gain to below 6%.
The USD/CAD currency pair rose 0.52% to 1.2838, from an opening of 1.2769, at 14:15 GMT on Tuesday. The EUR/USD swelled 0.33% to 1.0727, from an opening of 1.0691.