US Dollar Index remains under pressure despite data and yields

• DXY moves modestly off lows. 
• US data and rising yields unable to push the US dollar higher. 

The greenback continues under pressure. It weakened again after a small short-lived recovery.  The US Dollar Index remains near 3-month lows, above mid-91.00s.

The Index bottomed earlier at 91.76, the lowest since September 20. From the lows bounced to the upside but weakened after reaching levels on top of 92.00. At the moment of writing was trading at 91.85/88, headed toward the lowest close in three months. 

Data and yields not enough to boost USD 

US yields were rising considerably on Tuesday, the first trading day of 2018. The 10-year yield climbed to 2.465%, erasing most of the last week slide. Usually, the greenback is benefited from higher yields but today only contributed to limited the decline. 

Today’s data included the IHS US Manufacturing PMI that rose to 55.1 the highest mark since March 2015. The strong report that surpassed expectation offered a minor impulse to the greenback. Traders appear to be looking into tomorrow’s FOMC minutes and Friday’s NFP.  

Chris Williamson, Chief Business Economist at IHS mentioned that the upbeat mood is underscored by an increased appetite to hire new staff, with the survey indicating that factory payroll numbers are rising at a rate not seen for over three years. “The combination of strengthening growth, a solid labour market and rising prices will add to expectations that the Fed will remain on track for another rate hike in the near future, with March looking a likely possibility”, Williamson added.