The dollar index (DXY00) on Monday recovered from early losses and finished up by +0.18%. Short-covering emerged in the dollar Monday after the sharp selloff in stocks sparked liquidity demand for the dollar.
The dollar on Monday initially moved lower on concern about the negative impact of US tariffs on the US economy. Also, comments made Sunday by President Trump weighed on the dollar when he said the US economy faces “a period of transition” from his tariff policies. In addition, the slide in T-note yields on Monday weakened the dollar’s interest rate differentials.
