The USD reached a new 5 month high versus its pairs, rising 0.2% in yesterday’s session. The dollar started the session slightly weaker, but the Philadelphia Fed Business Outlook for May came much stronger than expected (34.4 versus 21 expected and versus 23.2 last month). The strong number pushed US Yields higher again, with the US 10 YR Treasury reaching 3.115% (highest level since 2011) helping the USD recover for the session.
It now seems like US yields are putting some pressure on the stock market, which ended the session slightly lower, also thanks to Trump wariness about the outcome of US-China trade talks.
Digging into the details of the Philly Fed number, new orders doubled and prices received rose to the highest levels since 1989, suggesting firms are starting to pass through higher costs, which might put more pressure on inflation and thus, on the possibility of more rate hikes by the FED.