The dollar index rose 0.24% on Tuesday, supported by weakness in stocks that boosted liquidity demand for the currency and higher crude oil prices that pushed up inflation expectations, potentially keeping Federal Reserve policy tight. New York Fed President John Williams added to the dollar's strength with hawkish comments that inflation remains quite high. The dollar retreated from its best levels after the US May trade deficit widened to a 14-month high of $77.6 billion, a negative factor for second-quarter GDP. The euro fell 0.25% against the dollar, though losses were limited by German May industrial production rising 0.9% month-over-month, the largest increase in eight months and well above expectations of 0.1%. The yen edged slightly higher, with the Japan May leading index climbing to a 4.75-year high of 116.8 and May household spending falling less than expected, while the 10-year Japanese government bond yield hit a 29-year high of 2.861%. Gold and silver prices settled lower, with August COMEX gold down $10.10 to close at a loss of 0.24% and September COMEX silver down $1.000 to a loss of 1.60%, pressured by the stronger dollar and higher crude oil prices that raised inflation expectations.
Dollar strengthens on hawkish Fed comments and higher crude oil boosting inflation expectations, while euro supported by strong German IP data but still falls.
Yen edges higher on strong Japan leading index and household spending data, but dollar overall strength limits gains; JGB yield at 29-year high.