The dollar index (DXY00) on Monday was little changed. The dollar Monday saw support from safe-haven demand after Israel declared war on Hamas. However, the dollar gave up most of its advance after stocks recovered from early losses and moved higher, reducing the liquidity demand for the dollar. Also, dovish comments from Fed Vice Chair Jefferson and Dallas Fed President Logan weighed on the dollar when they said the recent jump in long-term Treasury yields may mean less need for the Fed to raise interest rates again.
Fed Vice Chair Jefferson said policymakers are "in a position to proceed carefully in assessing the extent of any additional policy firming that may be necessary," as the recent increase in Treasury yields acts as a potential further restraint on the economy.
