The dollar index (DXY00) on Monday was unchanged. The dollar on Monday recovered from overnight losses and was little changed. Short-covering in the dollar emerged Monday morning after St. Louis Fed President Bullard said he favored two more 25 bp rate hikes this year. However, gains in the dollar were limited by the ongoing U.S. debt ceiling impasse and strength in EUR/USD on hawkish comments from ECB President Lagarde.
Fed comments Monday were mixed for the dollar. On the bullish side for the dollar, St. Louis Fed President Bullard said the Fed will have to move interest rates higher to tame inflation, and he's thinking of "two more 25 bp rate hikes this year." On the bearish side, Minneapolis Fed President Kashkari said he might support holding interest rates at current levels at the June FOMC meeting to give Fed officials more time to assess the effects of past rate hikes and the inflation outlook. Also, comments from Atlanta Fed President Bostic signal he favors the Fed pausing its rate-hike regime when he said the Fed had done a lot of tightening and monetary policy acts with a lag, so he is comfortable with waiting a bit to see how things play out.
