The dollar index (DXY00) today fell from a 7-week high and is down -0.13%. The dollar gave up an early advance and turned lower today on weaker-than-expected US economic news that is dovish for Fed policy. Weekly jobless claims rose more than expected, Apr capital goods new orders nondefense ex-aircraft and parts unexpectedly declined, Q1 GDP was revised lower, and the Apr core PCE price index, the Fed's preferred inflation gauge, rose as expected. Also, Apr new home sales fell more than expected.
The dollar initially moved higher today after US forces shot down four Iranian drones fired at a commercial ship and hit a launch site near the Strait of Hormuz, which boosted safe-haven demand for the dollar. Also, today's +2% jump in WTI crude oil raises inflation expectations and may prompt the Fed to tighten monetary policy, a positive factor for the dollar. In addition, hawkish comments from Fed Governor Lisa Cook, Minneapolis Fed President Neel Kashkari, and St. Louis Fed President Alberto Musalem boosted the dollar when they expressed concern about persistently high inflation.
