DXY steadies near 98.83 before PCE, GDP as Treasury yields ease

The Dollar Index sits at 98.8260, down 0.07% intraday with the New York session still open around 14:00 ET. That's a step back from Tuesday's session, when the index recovered to near 99.07 as EUR/USD corrected off a four-day high. Risk appetite firmed: the S&P 500 is up 0.13% to 7675.75, the Nasdaq Composite up 0.48%, and the VIX fell 1.77% to 15.57. Oil dropped hard — WTI down 3.35% to $82.12, Brent down 5.61% to $87.00 — while gold eased 0.07% to $4648.42. Treasury yields fell across most of the curve, though the 3-month edged up. The dollar is essentially marking time ahead of this afternoon's PCE inflation print and GDP data.

US yields eased today: the 10-year fell 6.1bp to 4.643%, the 30-year down 5.7bp to 5.174%, the 5-year down 5.3bp to 4.355%, while the 3-month edged up 0.2bp to 3.705%. The Fed funds target stands at 3.50-3.75%, and the live 2026 policy debate is whether the Fed hikes further, not whether it cuts. That framing got support from a headline citing Fed's Collins saying the Fed may need to raise rates soon without inflation decline. Separately, a headline reported a former mentor warning Treasury Secretary Scott Bessent 'will lose' his battle with bond markets, against a backdrop of headlines flagging a $40 trillion US debt balloon. Fed Chair Kevin Warsh delivers his first Jackson Hole keynote Friday, August 28.

EUR/USD trades at 1.1674 (+0.09%), still below Tuesday's four-day high of 1.1711 after correcting to around 1.1655 as the dollar firmed; Germany's Ifo Business Climate rose to 88.8 in August, beating the 87.2 forecast. GBP/USD is at 1.3644 (+0.10%), consolidating in Tuesday's roughly 1.3600-1.3675 band with UK CPI having accelerated to 2.9% y/y in July. USD/JPY sits at 159.22 (+0.08%); see below. USD/CAD is at 1.3834 (-0.08%), pressured Tuesday by a slumping WTI and the US-Canada tariff dispute, with US tariffs on Canadian autos and steel set to rise to 50% from January 1, 2027.

USD/JPY trades at 159.22, up 0.08% intraday. Tuesday's session closed near 159.26 (+0.11%) per Trading Economics, as a modestly firmer dollar drew safe-haven demand tied to a US plan to cut Iran off the global financial system; gains were capped by skepticism over the Treasury's expanded debt-buyback plan. The desk frames this as a single-session wobble inside a broader yen recovery — the yen is up roughly 2.7% over the trailing month, following the first US-Japan joint FX intervention since 2011, confirmed August 3 by Finance Minister Satsuki Katayama. Vice Finance Minister Atsushi Mimura has said authorities are 'always prepared to take suitable measures.' Markets price around 80% odds of a 25bp BoJ hike to 1.25% at the September 18 meeting, per Bloomberg (August 23); BoJ Deputy Governor Ryozo Himino speaks to business leaders in Saitama Thursday, a signal watched ahead of that decision.

Later today: US Core PCE Price Index m/m (forecast 0.2%, prior 0.1%), Prelim GDP q/q (forecast 1.5%, prior 1.5%), Prelim GDP Price Index q/q (forecast 6.2%, prior 6.2%), Core Durable Goods Orders m/m (forecast 0.6%, prior 0.6%), Durable Goods Orders m/m (forecast 0.4%, prior 0.3%), Personal Income m/m (forecast 0.2%, prior 0.2%) and Personal Spending m/m (forecast 0.1%, prior 0.3%) are all due. Ahead of that, CHF UBS Economic Expectations (prior 10.0) is due, followed by UK CBI Realized Sales (forecast -35, prior -26). All are listed as upcoming, with no releases yet reported.