The dollar index stabilized above 105 on Tuesday as investors continued to assess the outlook for Federal Reserve monetary policy in light of recent central bank commentary. New York Fed President John Williams stated that interest rate cut decisions will be based on incoming data, while Richmond Fed President Thomas Barkin expressed confidence that inflation will decline to 2% as the full effects of higher rates materialize. Last week, the index dropped about 1% as the Fed held interest rates steady and Chair Powell ruled out the possibility of another rate hike to combat stubbornly high inflation, reiterating the central bank’s easing bias despite a delay in the timing. Data also showed that the US economy added 175,000 jobs in April, down from the revised 315,000 added in March and falling short of market expectations of 243,000. Markets now see 45 basis points in total cuts this year, with a November move fully priced in.
