The dollar index (DXY00) on Friday rose by +0.45% and posted a 5-week high. The dollar on Friday garnered strength from a fall in EUR/USD to a 3-week low and a decline in GBP/USD to a 5-week low. Also, the Chinese yuan tumbled to a 4-month low against the dollar Friday after Chinese authorities set a weaker-than-expected daily fixing, fueling speculation they would tolerate further losses in the currency. Friday’s decline in T-note yields was a negative factor for the dollar.
The markets are discounting the chances for a -25 bp rate cut at 17% for the next FOMC meeting on April 30-May 1 and 86% for the following meeting on June 11-12.
