US Dollar Holds Gains Ahead of Key Economic Data Releases
The US Dollar (USD) maintained its strong position against other major currencies early Tuesday, October 6, following modest gains from the previous day. The USD Index remained in positive territory, supported by a slight rise in the benchmark 10-year US Treasury bond yield. However, the upside was capped by an improvement in risk sentiment, as evidenced by gains in Wall Street's main indexes.
Key economic data releases are expected later in the day, including Eurozone Retail Sales for August and trade balance data from Canada and the US. Investors will also monitor comments from policymakers at the European Central Bank (ECB) and the Federal Reserve (Fed).
The Euro (EUR) faced pressure as uncertainty surrounding France's fiscal outlook dampened expectations of further ECB policy tightening. Analysts at ING noted that the Euro continues to suffer from an unwinding of ECB rate hike expectations due to French bond turbulence, leaving risks firmly on the downside for EUR/USD. They suggested that EUR/USD could test 1.110 or even 1.100 if bond market stress intensifies.
Meanwhile, crude oil prices continued to ease, with the barrel of West Texas Intermediate (WTI) trading below $88 early Tuesday. The decline came despite news of military operations by Yemen's Houthi against Saudi Arabia. In other markets, Gold (XAU/USD) edged lower toward $4,100, constrained by broad-based USD strength and rising US T-bond yields.