The dollar index (DXY00) on Friday rose by +0.18% and posted a 1-week high. The dollar found support Friday on the stronger-than-expected U.S. Q1 employment cost index report, which bolsters the case for the Fed to keep raising interest rates. The dollar also found support on weakness in the yen, which dropped to a 7-week low against the dollar after the BOJ maintained its stimulus measure and said it would patiently continue with monetary easing. However, gains in the dollar were limited Friday as stocks rallied, which curbed liquidity demand for the dollar.
Friday’s mostly stronger-than-expected U.S. economic news was supportive of the dollar. Mar personal spending was unchanged m/m, slightly stronger than expectations of -0.1% m/m. Also, Mar personal income rose +03% m/m, stronger than expectations of +0.2% m/m. In addition, the Q1 employment cost index rose +1.2% (q/q annualized), stronger than expectations of +1.1%. Finally, the MNI Apr Chicago PMI unexpectedly rose +4.8 to an 8-month high of 48.6, stronger than expectations of a decline to 43.6.
