The dollar index (DXY00) Monday rose by +0.19% and posted a 2-week high. The dollar moved higher on Monday on signs of strength in the economy after the Mar S&P Global Services PMI index and Feb Chicago Fed national activity index rose more than expected. Also, higher T-note yields on Monday strengthened the dollar’s interest rate differentials. The dollar added to its gains Monday afternoon on hawkish comments from Atlanta Fed President Bostic, who said he sees just one 25 bp rate cut by the Fed this year.
Gains in the dollar were limited on Monday after the Mar S&P Global manufacturing PMI unexpectedly contracted. Also, Monday’s rally in the S&P 500 to a 2-week high curbed liquidity demand for the dollar. In addition, the dollar is under pressure on reports that US reciprocal tariffs scheduled to be imposed on April 2 would be more targeted than widespread tariffs originally threatened, easing inflation concerns that could allow the Fed to keep cutting interest rates.
