The dollar index (DXY00) on Thursday fell from a 7-week high and finished down -0.18%. The dollar gave up early gains and turned lower today on weaker-than-expected US economic news that is dovish for Fed policy. Weekly jobless claims rose more than expected, Apr capital goods new orders nondefense ex-aircraft and parts unexpectedly declined, Q1 GDP was revised lower, and the Apr core PCE price index, the Fed’s preferred inflation gauge, rose as expected. Also, Apr new home sales fell more than expected. The dollar added to its losses after the S&P 500 rallied to a new record high after Axios reported that the US and Iran had reached a tentative peace deal, pending President Trump’s approval.
The dollar initially moved higher on Thursday after US forces shot down four Iranian drones fired at a commercial ship and hit a launch site near the Strait of Hormuz, which boosted safe-haven demand for the dollar. Also, hawkish comments from Fed Governor Lisa Cook, Minneapolis Fed President Neel Kashkari, and St. Louis Fed President Alberto Musalem boosted the dollar when they expressed concern about persistently high inflation.
