The dollar index (DXY00) today is up by +0.31%. The dollar today recovered from early losses and is moderately higher as it consolidates above Thursday’s 6-month low. Short covering emerged in the dollar today after US March payrolls rose more than expected, a hawkish factor for Fed policy.
The dollar today initially moved lower after China announced 34% retaliatory tariffs on US imports, bolstering concerns that a trade war will derail the economy and force the Fed to cut interest rates. Also, today’s fall in the 10-year T-note yield to a 6-month low of 3.8567% weakened the dollar’s interest rate differentials. In addition, the dollar may face a confidence crisis if President Trump’s tariffs prompt foreign investors to dump US assets.
