• The dollar struck a 1-1/2-month high on Tuesday as Treasury yields rose after a strong reading for U.S. manufacturing activity hardened expectations for U.S. interest rates to rise by the year-end.
The dollar index against a basket of six major currencies was up 0.3 percent at 93.848 after touching 93.891, its highest since Aug. 17.
On track for its third straight day of rises, the benchmark 10-year Treasury yield edged up to 2.351 percent after briefly touching a three-month high of 2.371percent overnight.
The euro was down 0.2 percent at $1.1708 after brushing $1.1702, its weakest since Aug. 17.
The dollar, which initially fell to 112.660 yen early in the session, was up 0.35 percent at 113.150 yen. A rise above 113.260 would take the greenback to its highest since mid-July.
• American International Group Inc (AIG.N) poses less of a threat to financial stability because it shrank its assets by more than $500 billion, Federal Reserve Chair Janet Yellen said on Monday in explaining why she voted in favor of releasing the company from stricter oversight.
Her comments and others published by regulators on Monday shed light on a process financial firms say is too opaque and unaccountable, indicating big banks and insurers will have to downsize dramatically if they are to shake off the “systemically risky” label.
• As expectations of a U.S. rate increase hardened to more than 71 percent by December from 42 percent a month earlier, according to the CME’s Fedwatch indicator, the dollar has rallied more than 3 percent over the last month.
• “Divergence trades between the Fed and the (European Central Bank) are back in fashion again and until we see a fresh commitment from the ECB to scale back its policy stimulus, the dollar will continue to gain against the euro,” said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt.
• The Federal Reserve's own actions, not transitory factors, are responsible for weak inflation, a Fed policymaker argued on Monday, and the U.S. central bank should wait to raise rates again until inflation hits its two percent goal.
"The Fed's policy to remove monetary accommodation over the past few years is likely an important factor driving inflation expectations lower," Minneapolis Fed President Neel Kashkari wrote in an essay on the bank's website, referring to the central bank's Federal Open Market Committee, which sets U.S. interest rates.
• President Donald Trump is discussing border security and other measures that the White House wants to see included in an immigration bill during a dinner with Republican lawmakers on Monday, an administration official said.
The White House dinner could influence the broad principles on immigration reform that Trump’s team is planning to release in the future, the official said.
• Relations between Catalonia's separatist government and Madrid have hit their lowest point in years following an outlawed referendum vote Sunday, deepening a constitutional crisis in Spain.
• A general strike in Catalonia on Tuesday will likely bring much of the wealthy Spanish region to a standstill, a move bound to ratchet up tensions with the Spanish government following a fractious independence vote at the weekend.
• Oil prices fell on Tuesday, declining for a second day and sapping more strength from a third-quarter rally, amid signs that a global glut in crude may not be clearing as quickly as some had hoped.
U.S. crude CLc1 was down 15 cents, or 0.3 percent, at $50.43 a barrel by 0649 GMT, after closing the previous session down $1.09, or 2.1 percent.
The U.S. benchmark posted a third quarter gain of around 12 percent, its strongest quarterly climb since the second quarter of 2016, but has now dropped nearly 5 percent from a six-month high reached on Thursday.
Brent crude LCOc1, the global benchmark, was down 26 cents, or 0.5 percent, at $55.86 a barrel. The contract fell 67 cents, or 1.2 percent, in the last session.
Reference: Reuters, CNBC
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