The dollar index (DXY00) Friday fell to a 1-week low and finished down by -0.24%. Dovish comments Friday from former New York Fed President Dudley knocked bond yields lower and weighed on the dollar when he said he sees “a strong case for a 50 bp cut” in interest rates at next week’s FOMC meeting. Dudley’s comments pushed the chances for a 50 bp rate cut at next week’s FOMC meeting in the swaps market up to 53% from 17% on Wednesday.
Strength in the yen also undercut the dollar as the yen jumped to an 8-1/2 month high against the dollar Friday. Finally, Friday’s stock rally curbed liquidity demand for the dollar. US economic news Friday was mixed for the dollar after the US Aug import price index ex-petroleum unexpectedly fell, and the University of Michigan’s Sep US consumer sentiment index rose to a 4-month high.
