The dollar index (DXY00) rallied to a 1-week high on Monday and finished up by +0.66%. The dollar rose on Monday amid carryover support from last Friday when President Trump nominated Keven Warsh as the next Fed Chair. Mr. Warsh is seen as more hawkish than other Fed Chair candidates and often emphasized inflation risks during his tenure as a Fed Governor from 2006-2011. The dollar added to its gains on Monday after the Jan ISM manufacturing index expanded at the strongest pace in more than 3.25 years. Also, hawkish comments on Monday from Atlanta Fed President Bostic were bullish for the dollar when he said he doesn’t see any Fed rate cuts this year.
The partial US government shutdown entered its third day on Monday. However, the shutdown is expected to be brief, as the House returns from a week-long break on Monday and may vote on the spending bill later Monday or Tuesday. Late last Thursday, President Trump said that he reached a tentative deal with Senate Democrats to avert a US government shutdown. The deal would fund the Homeland Security Department for two weeks to allow more time for talks on immigration enforcement and contains full-year funding for several other government agencies.
