The dollar index (DXY00) fell from a 6-week high on Wednesday and finished down by -0.24%. The dollar gave up an early advance on Wednesday and moved lower after comments from President Trump that the US was in the “final stages” with Iran, which knocked crude oil prices down by more than -5%, which lowered inflation expectations and could prompt the Fed to ease monetary policy, a negative for the dollar. Also, Wednesday’s stock rally reduced liquidity demand for the dollar.
The minutes of the April 28-29 FOMC meeting were hawkish and supportive of the dollar as “many” policymakers called for the Fed to drop its easing bias and signal its next move could be an interest rate increase. Also, most of the meeting’s participants said that “some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%.”
