The dollar moves in the opposite direction with global stock market since last week as the extent of investors risk aversion directs the flow of money.
The dollar weakened against the euro and sterling in early Tuesday when rising Asia and European equities eased concern over credit market. However, US stocks dipped near the closing bell today, raising the attractiveness of safe heaven, the US dollar. The euro is trading in narrow range between 1.3680 and 1.3726 against the dollar on Tuesday. The sterling climbed more than 100 pips to as high as 2.0377 versus the dollar, catching up yesterday¡¯s lag with the euro strength.
The dollar was little changed after a run of mixed US data this morning as there is some caution after last week¡¯s huge correction in the dollar. US PCE index rose 0.1% in June, compared with a 0.5% reading in the prior month. Core PCE index came out at 0.1%, below the estimate of 0.2%. US personal income maintained a growth rate of 0.4% in June, falling short of a call for 0.5%. US personal spending only rose by 0.1% in June, far below the forecast of 0.2% and a previous reading of 0.5%. Besides, Chicago PMI fell from 60.2 to 53.4 in July, worse than the expectation of 58. US consumer confidence index increased from 103.9 to 112.6, beating the consensus of 105.
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