The dollar index (DXY00) today is down by -0.67%. The dollar is sliding today as the US-China trade rift widened after China today imposed 84% tariffs on US goods in retaliation for the US imposing a total of 104% tariffs on Chinese goods. Also, the dollar is facing a confidence crisis as the US renegotiates its relationships with its trading partners, diminishing its reserve-currency status and prompting some foreign investors to liquidate their dollar assets. The dollar recovered from its worst level on hawkish comments from Minneapolis Fed President Kashkari, who said there is a higher bar for Fed rate cuts due to the inflationary impact of tariffs.
Minneapolis Fed President Kashkari said, "The hurdle to change the federal funds rate one way or the other has increased due to tariffs," and that the Fed is less likely to lower interest rates in the face of tariffs given their inflationary impact, even if the economy begins to deteriorate.
