The dollar index (DXY00) on Tuesday extended Monday's gains and rose by +0.48% to a 1.5-week high. The dollar rallied on Tuesday following hawkish comments from the Fed. Kansas City Fed President Jeff Schmid said the Fed needs to continue pressing against inflation that has remained stubbornly high, and Minneapolis Fed President Nel Kashkari said any drastic cuts to interest rates would risk stoking inflation. Also, political uncertainty in France and Japan is undercutting the euro and yen to the benefit of the dollar.
The ongoing shutdown of the US government is bearish for the dollar as the shutdown entered its second week on Monday. The longer the shutdown is maintained, the more likely the US economy will suffer, and GDP growth will stagnate, a negative factor for the dollar.
