The dollar index (DXY00) today is up by +0.19%. The dollar recovered from a 1.5-week low today and turned higher as short covering emerged after the US unit labor cost report was slightly stronger than expected, which was negative for the inflation outlook and hawkish for Fed policy.
The dollar initially moved lower today on a larger-than-expected increase in weekly US jobless claims, a dovish factor for Fed policy. Also, dovish comments from San Francisco Fed President Mary Daly weighed on the dollar when she said it may be appropriate for the Fed to cut interest rates in the “coming months.” In addition, strength in stocks today has reduced liquidity demand for the dollar.
