The dollar index (DXY00) Tuesday rose by +0.30%. The dollar on Tuesday recovered from early losses and posted moderate gains as T-note yields jumped on the stronger-than-expected US Nov JOLTS job openings and Dec ISM services reports, which were hawkish for Fed policy and dampened the chances of additional Fed rate cuts in the near term. Hawkish comments from Richmond Fed President Barkin also supported the dollar when he said if price pressures persist, the Fed will have to be tougher with interest rates. In addition, stock weakness Tuesday boosted liquidity demand for the dollar.
The dollar Tuesday initially moved lower on negative carryover from Monday when the Washington Post reported that President-elect Trump's aides are weighing a tariff program covering only critical imports. If implemented, such a plan would disrupt global trade less than expected and reduce the inflationary impact of the tariffs, a dovish factor for Fed policy. Also, the US trade deficit widened in November, a negative factor for Q4 GDP and a bearish factor for the dollar.
