The dollar index (DXY00) rose by +0.06% on Monday. The dollar found support from Monday's US economic news, which showed that new capital goods nondefense, ex-aircraft and parts orders rose more than expected, a sign of economic strength. Some safe-haven demand also supports the dollar as President Trump has raised the possibility of intensified action against Iran and as Houthi militants in Yemen claimed to have struck facilities linked to Saudi Aramco in the Red Sea port towns of Jizan and Yanbu on Saturday.
Gains in the dollar were limited on Monday, as an easing of tensions in the Middle East has curbed safe-haven demand for the currency after the US and Iran held off on attacks for a third straight day. Also, Monday's -7% plunge in WTI crude oil has lowered inflation expectations and could prompt the Fed to pursue easier monetary policy, a negative factor for the dollar. In addition, lower T-note yields on Monday weakened the dollar's interest rate differentials.
