The dollar index (DXY00) on Thursday rose by +0.54% and rallied to a 2-1/2 month high. The dollar Thursday found support from better-than-expected U.S. economic news. Also, hawkish Fed comments pushed T-note yields higher and supported the dollar after Boston Fed President Collins and former St. Louis Fed President Bullard said we may need more rate hikes to control inflation. Also, a selloff in stocks Thursday boosted the liquidity demand for the dollar.
U.S. economic news Thursday was supportive of the dollar. Weekly initial unemployment claims unexpectedly fell -10,000 to 230,000, showing a stronger labor market than expectations of an increase to 240,000. Also, the Jul Chicago Fed national activity index rose +0.45 to 0.12, stronger than expectations of -0.22. In addition, July capital goods new orders nondefense ex-aircraft and parts rose +0.1% m/m, right on expectations.
