Dollar climbs ahead of crucial US data

The dollar rose in European trade on Tuesday against a basket of major rivals away from two-week lows as US 10-year treasury yields rebounded. 

Investors now await important US employment costs data for the first quarter, and housing prices, and consumer confidence data for April. 

Later today, the Federal Reserve will convene and will provide its decisions tomorrow, expected to include clues on the future of US interest rates this year. 

As the odds of Fed interest rate cuts in June and July recede, the dollar is on track for the fourth monthly profit in a row. 

The Index

The dollar index rose 0.3% to 105.96, with a session-low at 105.63. 

The index lost 0.45% on Monday, resuming losses and moving away from two-week lows at 105.41. 

The dollar was pressured by improving risk appetite and weak haven demand, while Japanese authorities intervened to support the yen against main rivals. 

US Yields

US 10-year treasury yields rose 0.6% on Tuesday, resuming gains and boosting demand on the dollar. 

Now investors await more data that would provide clues on the future of US interest rates this year, including the all-important payrolls report.

US Rates 

According to the Fedwatch tool, the odds of a Fed interest rate cut in June stood at 12%, while the odds of a July interest rate cut stood at 30%. 

According to the tool, now investors are pricing in barely one interest rate cut this year, probably in November, as inflation remains stubborn. 

Important Data

Later today, US labor costs are expected up 1% in the first quarter of 2024, up from 0.9% in the fourth quarter of 2023.

US home prices are expected up 6.7% in February, up from 6.6% in January.  

The CB Consumer Confidence index is expected down to 104.00 from 104.7. 

The Fed

The Federal Reserve is convening today for its two-day policy meeting, expected to maintain interest rates at 5.5%, the highest in 12 years. 

The statement and Fed Chair Jerome Powell will provide important clues on the future of US interest rates this year.

Monthly Trades 

The dollar index is up 1.5% in April, on track for the fourth monthly profit in a row.