The dollar index (DXY00) fell from a 2.5-week high today and is down by -0.11%. The dollar gave up an overnight advance and turned lower today when WTI crude oil dropped from a 6-week high and moved lower, which eased inflation expectations, a dovish factor for Fed policy. The dollar also fell after the Aug ADP employment change rose less than expected, helping knock T-note yields lower.
The dollar initially moved higher today after escalation of US-Iran hostilities boosted crude oil prices and pushed the 10-year T-note yield to a 2.75-year high, strengthening the dollar’s interest rate differentials. Overnight losses in stock index futures also boosted demand for dollar liquidity.
