The dollar index (DXY00) on Wednesday rose by +0.36% and posted a 9-3/4 month high.  The dollar found support from Wednesday’s stronger-than-expected U.S. Aug capital goods new orders report, which helped push the 10-year T-note yield to a 16-year high and strengthened the dollar’s interest rate differentials.  Also, a slump in the S&P 500 to a 3-3/4 month low boosted the liquidity demand for the dollar.  In addition, weakness in the euro and the yen supported the dollar as the euro fell to an 8-1/2 month low against the dollar, and the yen tumbled to an 11-month low against the dollar.   

Wednesday’s U.S. economic news was supportive for the dollar after Aug capital goods new orders nondefense ex-aircraft and parts rose +0.9% m/m, stronger than expectations of +0.1% m/m and the biggest increase in 7 months.

Dovish comments Wednesday from Minneapolis Fed President Kashkari were bearish for the dollar when he said a government shutdown and a prolonged auto strike may slow... Read more