The dollar index (DXY00) Thursday rose by +0.40%. The dollar rallied on stronger-than-expected US economic reports, which were hawkish for Fed policy and drove the 10-year T-note yield higher by +8 bp. Thursday’s economic reports helped reduce expectations for a 50 bp rate cut by the Fed at the September 17-18 FOMC meeting to 26% from 75% last week.
Thursday’s rally in stocks curbed liquidity demand for the dollar. Also, dovish Fed comments Thursday undercut the dollar when Atlanta Fed President Bostic said he is "open" to an interest rate cut in September, and St. Louis Fed President Musalem said, “The time may be nearing when an adjustment to moderately restrictive policy may be appropriate.”
