The dollar index (DXY00) on Friday rose by +0.56%. The dollar Friday recovered from an 11-1/2 month low and moved moderately higher. A jump in the 10-year T-note yield to a 1-1/2 week high Friday sparked short covering in the dollar. Gains in the dollar accelerated Friday on hawkish comments from Fed Governor Waller, who said the Fed needs to keep raising interest rates. The market shows an 81% chance the Fed will raise the federal funds target range by 25 bp at the May 2-3 FOMC meeting.
Friday’s U.S. economic news was mixed for the dollar. Mar retail sales fell -1.0% m/m, weaker than expectations of -0.5% m/m and the biggest decline in 4 months. However, Mar core retail sales (ex-autos and gasoline) fell -0.3% m/m, a smaller decline than expectations of -0.6% m/m. Mar manufacturing production fell -0.5% m/m, weaker than expectations of -0.1% m/m. The University of Michigan U.S. Apr consumer sentiment rose +1.5 to 63.5, stronger than expectations of 62.1.
