The dollar index (DXY00) Friday rose by +1.06%. The dollar on Friday recovered from early losses and rallied moderately, rebounding from Thursday’s 6-month low. Short covering emerged in the dollar Friday after US March payrolls rose more than expected, a hawkish factor for Fed policy. The dollar added to its gains Friday due to hawkish comments from Fed Chair Powell, who said the Fed was in no hurry to adjust its monetary policy by cutting interest rates.
The dollar on Friday initially moved lower after China announced 34% retaliatory tariffs on US imports, bolstering concerns that a trade war would derail the economy and force the Fed to cut interest rates. Also, Friday’s fall in the 10-year T-note yield to a 6-month low of 3.856% weakened the dollar’s interest rate differentials. In addition, the dollar may face a confidence crisis if President Trump’s tariffs prompt foreign investors to dump US assets.
