The dollar index (DXY00) on Tuesday rose by +0.26%. The yen’s weakness is underpinning the dollar, as it tumbled to a 1.5-year low against the dollar on Tuesday. Gains in the dollar accelerated Tuesday after US Oct new home sales fell less than expected and after St. Louis Fed President Alberto Musalem said the US economy is pretty robust and that he expects above-potential growth.
Gains in the dollar were limited after Tuesday’s news showed that US December core consumer prices rose less than expected, a dovish factor for Fed policy. The dollar still has some negative carryover from Monday, amid concerns over Fed independence, after Fed Chair Powell said the Justice Department’s threat of criminal charges against the Federal Reserve over his June testimony on Fed headquarters renovations is the consequence of the Fed not going along with President Trump’s calls for lower interest rates.
