The dollar index (DXY00) Monday rose by +0.26%. The dollar posted moderate gains Monday after President Trump revealed plans to impose 25% tariffs on all steel and aluminum imports into the US, raising concern that rising tariffs may boost inflation and limit the Fed's ability to cut interest rates. The dollar also had carryover support from last Friday's US payroll report that showed the Jan unemployment rate fell to an 8-month low and Jan average hourly earnings rose more than expected, hawkish factors for Fed policy. Monday's rally in stocks reduced liquidity demand for the dollar.
The markets are discounting the chances at 8% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
