The dollar index (DXY00) on Tuesday rose by +0.31% and posted a 2-month high. Hawkish comments Tuesday from Minneapolis Fed President Kashkari pushed the 10-year T-note yield up to a 2-1/4 month high and strengthened the dollar’s interest rate differentials. Also, weakness in stocks boosted the liquidity demand for the dollar. However, the ongoing U.S. debt ceiling impasse contained gains in the dollar.
Tuesday’s economic news was mixed for the dollar. On the positive side, Apr new home sales unexpectedly rose +4.1% m/m to a 13-month high of 683,000, stronger than expectations of a decline to 665,000. Conversely, the May S&P U.S. manufacturing PMI fell -1.7 to 48.5, weaker than expectations of 50.0. Also, the May Richmond Fed manufacturing survey unexpectedly fell -5 to -15, weaker than expectations of an increase to -8.
