Markets climb as Volume picks up

The DXY, greenback’s index against six major currencies was 0.3% higher at 89.346, continuing its Monday’s rebound from a three-year low of 88.251 set on Friday. On the other hand, Dollar’s outlook is clouded by concerns that the ballooning U.S. fiscal deficit could disrupt the economy.

The Dollar added 0.15% against the JPY to 106.760 and 0.15% against the Euro to $1.2387. With little in the way of significant economic data on the schedule, traders expect the $151 billion sales of short-term U.S. Treasury sales will provide the clearest gauge yet of how steeply bond yields may rise in the world’s largest economy.

Traders will also be analyzing the minutes from the January’s 30-31 Federal Reserve’s meeting, Janet Yellen’s last as chair, where the rate was kept unchanged. The Fed minutes could pave the way for the future steps and thoughts of the policymakers where they will be released on Wednesday at 19:00 GMT.

The U.S. currency has been weighed down by a barrage of factors, including worries about widening U.S. trade and budget deficits and speculation Washington might pursue a weak dollar strategy. There is also talk that foreign central banks may be reallocating their reserves out of the dollar.

Economists say U.S. President Donald Trump’s tax cuts and spending plans could backfire by overheating an already strong economy and causing an unwelcome pick-up in inflation.

The U.S. crude oil prices pushed up by reduced flows from Canada while international Brent prices eased.

The higher WTI prices was believed to be due to reduced flows from Canada’s Keystone pipeline, which has been operating below capacity since late last year due to a leak, cutting Canadian supplies into the United States.

Outside North America, the dip in Asian stocks together with a stronger dollar eased Brent crude which potentially curbs demand as it makes fuel more expensive for countries using other currencies domestically.

The opposing price direction of the two main crude benchmarks has sharply reduced WTI’s discount to Brent, to around $3.22 per barrel on Tuesday, down from over $7 in late 2017.

Looking at the bigger picture, oil markets remain well supported due to OPEC and Russia oil-cut deal due to expire at the end of this year. Meanwhile, Russia has shown signs it may at some stage gradually start to increase output again.

OPEC Secretary-General Mohammad Barkindo said on Monday that the global oil demand for 2018 is estimated to grow 1.6 million barrels per day due to an “encouraging environment.”

The United States late last year became the world’s second biggest oil producer, behind Russia and ahead of top exporter Saudi Arabia. Mounting U.S. production is threatening to disturb OPEC’s efforts.

Last week, the amount of U.S. oil rigs drilling for new production indicated that U.S. crude output, already at a record 10.27 million bpd, may rise further.