The dollar index (DXY00) recovered from a 3-month low today and is up +0.05%. Short covering emerged in the dollar today on better-than-expected US economic news, including weekly jobless claims, the Aug Philadelphia Fed business outlook survey, and July leading indicators. Also, today’s +2% jump in WTI crude oil to a 1-month high boosts inflation expectations and may persuade the Fed to tighten monetary policy, a supportive factor for the dollar.
The dollar initially extended Wednesday’s sharp losses today on negative carryover from Wednesday, when the US Treasury boosted liquidity and announced plans to increase buybacks of long-dated bonds. Also, dovish comments today from San Francisco Fed President Mary Daly weighed on the dollar when she said she's "not seeing evidence" of a need for preemptive Fed rate hikes.
