The US dollar was well supported against a basket of currencies Tuesday following a rout in the commodities market that sent crude oil prices below $50 a barrel and gold prices to five-year lows.
The dollar index, a trade-weighted average of the US currency against a basket of rivals, rose to an intraday high of 98.15 Tuesday following four consecutive daily gains. The dollar index would subsequently consolidate below 98.00 at the start of the New York session.
The dollar lost some ground against the euro, which is consolidating slightly higher following news from Greece that Athens had cleared arrears with the International Monetary Fund (IMF) by making a €2.05 billion repayment Monday. Athens also made a €4.2 billion repayment to the European Central Bank (ECB).
The EUR/USD was consolidating at 1.0863 in Monday’s early New York session, up 0.4%. The pair faces immediate support at 1.0812, the low from July 21. On the upside, the EUR/USD could face resistance at 1.0866, the high from July 20, followed by 1.1036.
The dollar was virtually unchanged against the Japanese yen and British pound amid a quiet release schedule.
The only notable release on Tuesday was UK public sector borrowing for the month of June. The Office for National Statistics said UK government borrowing fell to £9.4 billion in June, the lowest figure since 2008. However, analysts had expected a bigger drop to £8.5 billion.
Global commodity prices plunged at the start of the week as expectations of a US interest rate increase kept the dollar elevated. Federal Reserve Chairwoman Janet Yellen told Congress last week that interest rates are expected to rise in 2015 for the first time in nearly a decade. Although Yellen did not specify when a rate increase might occur, analysts suspect the Fed will wait until October at the earliest. The Fed’s next scheduled policy meetings are on July 28-29 in Washington.
Gold futures were down 0.3% to $1,103.50 an ounce Tuesday morning after reaching five-year lows the day before.
The energy markets were little changed on Tuesday morning. US crude prices fell below $50 a barrel Monday and eventually settled at $50.15 a barrel, the lowest settlement since early April. Global benchmark Brent crude tumbled below $57 a barrel, where it currently stands as of 13:00 GMT.