Dollar Gains on Inflation Data, Euro Remains Hawkish Amid ECB Tone

The US dollar continues to gain strength due to inflation data that came in above expectations for July's Personal Consumption Expenditures index, both month-over-month and year-over-year.

This has reinforced market expectations for another Federal Reserve rate hike before the end of the year. Treasury yields remain contained thanks to the Treasury's active buyback program for long-dated bonds.

The euro is maintaining a moderately positive tone amid a clearly hawkish tone from the European Central Bank, with officials pointing to the need for further increases in borrowing costs due to persistent inflationary pressure driven by both tensions in the Middle East and a surprisingly resilient eurozone economy.