The dollar index (DXY00) on Thursday rose by +0.04% as it awaits Friday's US CPI report for September. The dollar garnered support from Thursday's existing US home sales report, which showed sales rose to a 7-month high. Also, higher T-note yields on Thursday strengthened the dollar's interest rate differentials. In addition, weakness in the yen benefited the dollar, after the yen fell to a 1.5-week low on Thursday on concerns that new Japanese Prime Minister Takaichi will advocate a less hawkish monetary policy. The dollar also garnered support on confirmation from the White House that President Trump will meet President Xi Jinping next Thursday in South Korea.
Gains in the dollar are limited by the ongoing US government shutdown. The longer the shutdown is maintained, the more likely the US economy will suffer and the more likely the Fed will have to cut interest rates.
