The dollar index (DXY00) on Friday rose by +0.09%. The dollar recovered from a 1.5-week low on Friday and turned higher after concerns eased over the credit quality of US regional banks. The dollar rose as the alleged loan frauds tied to Zions Bancorp and Western Alliance Bancorp appear to be confined and show no signs of contagion. An easing of US-China trade tensions is positive for global growth prospects and the dollar, following President Trump's statement that high tariffs on Chinese goods are unsustainable. Higher T-note yields on Friday also strengthened the dollar's interest rate differentials.
Gains in the dollar were limited due to dovish comments from St. Louis Fed President Alberto Musalem, who said he could support another interest rate cut to bolster a slowing labor market. The ongoing shutdown of the US government is also bearish for the dollar. The longer the shutdown is maintained, the more likely the US economy will suffer, a negative factor for the dollar.
