The dollar index (DXY00) on Tuesday fell back from a 2-1/2 month high and posted a small -0.06% loss.  Lower T-note yields Tuesday weighed on the dollar.  The dollar also moved lower after U.S. negotiators agreed to a tentative agreement to raise the debt ceiling, which puts a cap on federal spending that could slow economic growth.  However, losses in the dollar were limited by hawkish Fed comments and the stronger-than-expected U.S. May consumer confidence report. 

Tuesday’s U.S. economic news was mixed for the dollar.  On the negative side, the May Dallas Fed manufacturing outlook level of general business activity unexpectedly fell -5.7 to a 3-year low of -29.1, weaker than expectations of an increase to -18.0.  Conversely, the Conference Board’s U.S. May consumer confidence index fell -1.4 to 102.3, stronger than expectations of 99.0.

Tuesday’s comments from Richmond Fed President Barkin were hawkish for Fed policy and bullish for the dollar when he said, "However I... Read more