The US Dollar Index maintained position near 101.40 on Tuesday as mixed manufacturing data and elevated Treasury yields provided support ahead of crucial employment figures. The ISM Manufacturing PMI dropped to 53.3 in June from 54.0 in May, falling short of forecasts but remaining in expansion territory above the key 50.0 threshold. Long-term Treasury yields stayed elevated, underpinning dollar strength despite the manufacturing slowdown.
Traders are exercising caution ahead of Friday’s Non-Farm Payrolls release, which will provide critical insight into labor market conditions and potential Federal Reserve policy direction. The resilient manufacturing sector, though cooling, suggests the economy continues to grow at a moderate pace. Central bank commentary has also influenced positioning as market participants assess the timeline for potential rate adjustments.
The dollar’s firmness reflects ongoing uncertainty about the economic trajectory and monetary policy outlook in major economies.
FXnCO Insight
Position sizing should be reduced ahead of NFP as dollar volatility is likely to spike regardless of manufacturing sector stability.
Source: FXStreet