The dollar index (DXY00) Monday rose by +0.36% to a 2-month high. Hawkish comments Monday from Fed Governor Waller and Minneapolis Fed President Kashkari were supportive of the dollar as they favor a slow pace to Fed rate cuts. The dollar also rallied moderately on Monday on reduced Fed interest rate cut expectations after last week’s US consumer and producer price reports for September were stronger than expected. In addition, weakness in the yen is boosting the dollar as the yen tumbled to a 2-1/4 month low Monday against the dollar.
Fed comments on Monday were supportive of the dollar as they signaled a gradual pace of interest rate cuts. Minneapolis Fed President Kashkari said it appears likely that "further modest reductions" in the federal funds rate will be appropriate in coming quarters. Also, Fed Governor Waller said recent data signals the US economy may not be slowing as much as desired, so policymakers can approach interest rate cuts "with less urgency" than they applied at last month's FOMC meeting.
