US Dollar Weakens as Bond Yields Fall, Economic Data Disappoints

US Dollar Weakens as Bond Yields Fall, Economic Data Disappoints

Posted Tuesday, August 18, 2020 by
Arslan Butt • 1 min read

The US dollar has fallen back towards multi-year lows early on Tuesday, weakening after bond yields declined even as economic data from the US disappointed markets. At the time of writing, the US dollar index DXY is trading around 92.66.

While the dollar has weakened against its major peers, the moves remain limited as traders adopt a wait and watch approach ahead of the release of the Federal Reserve’s minutes in Wednesday. The Greenback turned bearish during the previous session after the New York Fed’s Empire State business conditions index fell from 17.2 in July to 3.2 I. August, indicating a worsening situation for US manufacturers.

Additional bearishness in the US dollar was driven by bond yields falling lower. The safe haven appeal of the dollar also received a blow over optimism about US-China tensions waning after both countries called off the planned review of the phase one trade deal.

Traders also remain pessimistic about the dollar’s outlook over the ongoing stalemate on the next round of fiscal stimulus measures, discussions on which have failed to make o progress so far. On Wednesday, the US dollar could see some movement following the release of Fed’s minutes, which could offer insights into the central bank’s expectations about the US economy and its recovery in the near future.

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