The dollar index (DXY00) today is up by +0.53%. Higher T-note yields today and weakness in stocks support moderate gains in the dollar. Also, weakness in EUR/USD is benefitting the dollar on dovish comments from ECB Vice President Guindos, who said he expects the ECB to continue lowering interest rates. The dollar has risen sharply over the past two weeks to a 1-year high last week due to President-elect Trump’s plans to raise tariffs and concerns his fiscal agenda will boost inflation and deter the Fed from cutting interest rates.
The markets are discounting the chances at 59% for a -25 bp rate cut at the December 17-18 FOMC meeting.
