The dollar index (DXY00) today edged to a new 2-year high but then fell back and is currently down -0.32%. The dollar was undercut by the US PCE deflator report, which was dovish for Fed policy and caused weaker US interest rate differentials with the 10-year T-note yield down -5 bp. In addition, today’s US personal spending and consumer sentiment reports were slightly weaker than expected.
The dollar was also undercut by US political uncertainty as the US government faces a shutdown at midnight tonight if Congress cannot pass a stop-gap spending bill.
