The dollar index (DXY00) on Friday rose by +0.04%. The dollar posted modest gains on Friday due to higher T-note yields, which have strengthened the dollar’s interest rate differentials. The dollar fell back from its best level after the University of Michigan US Sep consumer sentiment index fell more than expected to a 4-month low. Also, Friday’s rally in the S&P 500 to a new record high curbed liquidity demand for the dollar.
Limiting the upside in the dollar are the increased expectations for Fed easing through year-end. The dollar is also being undercut by concerns over Fed independence, which could prompt foreign investors to dump dollar assets as President Trump attempts to fire Fed Governor Cook, and by Stephen Miran’s intention to be a Fed Governor while still technically holding his White House job on the Council of Economic Advisors.
