The dollar index (DXY00) today gave up overnight gains and is down by -0.24%. The dollar retreated today after US weekly jobless claims unexpectedly rose to a 3.75-year high and Aug CPI was right on expectations, cementing expectations for at least a 25 bp rate cut by the Fed at next week's FOMC meeting. Also, strength in the euro undercut the dollar after ECB President Lagarde said the disinflationary process is over in the Eurozone, signaling the ECB is done cutting interest rates. Strength in stocks today also reduced liquidity demand for the dollar.
Limiting the upside in the dollar are the increased expectations for Fed easing through year-end. The dollar is also being undercut by concerns over Fed independence, which could prompt foreign investors to dump dollar assets as President Trump attempts to fire Fed Governor Cook, and by Stephen Miran's intention to be a Fed Governor while still technically holding his White House job on the Council of Economic Advisors.
