The dollar index (DXY00) Monday fell by -0.49% and is just above last Friday’s 3-year low. The dollar posted moderate losses Monday as a stock rebound curbed liquidity demand for the dollar. The dollar is also facing a confidence crisis as the US trade war diminishes the dollar’s reserve-currency status and has prompted some foreign investors to liquidate their dollar assets. The dollar extended its losses Monday after Fed Governor Waller said that if the inflation impact from tariffs is temporary, then Fed rate cuts would be on the table later this year. The dollar did find some support Monday on a slight easing of tariff tensions after President Trump temporarily excluded most consumer electronics from reciprocal tariffs.
On Monday, Fed Governor Waller said he expects the impact of tariffs on inflation to be temporary and in that case, interest rate cuts would “very much” be on the table for the latter half of 2025.
