The dollar index (DXY00) Tuesday fell to a 1-1/2 week low and finished down by -0.32%. The dollar remains under pressure after Moody's Ratings late last Friday downgraded the US government's credit rating from Aaa to Aa1, citing a ballooning budget deficit and fiscal concerns. The downgrade puts the dollar's status as a global reserve currency into question and may prompt some investors to lighten up on their dollar assets. Losses in the dollar accelerated Tuesday when St. Louis Fed President Musalem said, "On balance, tariffs are likely to dampen economic activity and lead to some further softening of the labor market."
The markets are discounting the chances at 5% for a -25 bp rate cut after the June 17-18 FOMC meeting.
