The U.S. dollar was broadly mixed Tuesday as the news stream buffets the foreign exchange market.

A better-than-expected reception to the Greek T-bill auction helped mitigate the reaction to Moody's decision to cut Portugal's credit rating two notches to A1. The ZEW survey captured the nature of the push/pull impulses Tuesday as the economic sentiment component was weaker than expected but the assessment of current conditions was stronger than expected. In a similar fashion, sterling was initially weighed down by lingering disappointment, S&P maintained its negative outlook, and the RICS fell to an 11-month low only to reverse in response to slightly higher-than-expected inflation (3.2% year over year vs. consensus of 3.1% and 3.4% in May). Choppy price action may continue as many participants seem to lack near-term conviction. Short-term momentum indicators warn that the foreign currency recovery may not be sustained in North America Tuesday.

China indicated it would continue to curb real estate speculation. That weighed on Asian equity markets, despite the better-than-expected start to the U.S. earnings season. The MSCI Asia-Pacific Index was off 0.4%, with the 1.6% drop in the Shanghai Composite the biggest decline in the region. Weak commodity prices took a toll.

European stocks were advancing for the sixth consecutive session, encouraged by favorable earnings news. Favorable guidance by BMW helped lift the auto sector, which is the top industry sector Tuesday. In North America, Intel's ( INTC) earnings will be reported after the market closes Tuesday. About 5% of the S&P 500 will report this week.

The combination of Portugal's downgrade and rising equity markets was weighing on European bond markets. The 10-year bund is 4 basis points higher and most of the peripheral spreads were steady Tuesday except for Portugal, where the spread widened 3 basis points to about 280 basis points. he pressure on Portugal is clearer in the two-year tenor where the yield is up 13 basis points and the spread has widened 11 basis points to 244 basis points. The U.S. Treasury will sell $21 billion of 10-year notes Tuesday and yields have resurfaced above the 3% threshold.
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