The dollar index (DXY00) Tuesday rose slightly by +0.02%, supported by higher T-note yields. Also, hawkish Fed comments supported the dollar. New York Fed President Williams said the Fed is "well positioned" to pull off a soft landing for the US economy, and St. Louis Fed President Musalem warned of easing monetary policy too quickly. In addition, Tuesday’s news that the US Aug trade deficit fell to a 5-month low supported the dollar. Tuesday’s rally in stocks curbed liquidity demand for the dollar.
Monday evening, St. Louis Fed President Musalem said, "Given where the economy is today, I view the costs of easing too much too soon as greater than the costs of easing too little too late."
