The dollar index (DXY00) rallied to a 1.5-year high on Monday and finished up by +0.23%. The dollar moved higher on Monday amid increased safe-haven demand as political turmoil in France and Spain weighed on the euro. Higher T-note yields on Monday also strengthened the dollar’s interest rate differentials after the 10-year T-note yield rose to a 24-year high of 5.35%. The dollar added to its gains on Monday after the prices paid sub-index of the Sep ISM services index rose more than expected to a 4-year high, a hawkish factor for Fed policy.
Dollar gains were limited on Monday after WTI crude oil fell more than 1%, easing inflation expectations that could persuade the Fed to ease monetary policy, a negative factor for the dollar.
