The dollar index (DXY00) on Friday was little changed after earlier climbing to a 1-week high. The selloff Friday in the S&P 500 to a 1-3/4 month low boosted liquidity demand for the dollar. Also, Friday’s plunge in GBP/USD to a 37-year low and the fall in the Chinese yuan to a 2-year low were positive factors for the dollar. However, the dollar gave up its advance Friday after T-note yields declined, which weakened the dollar’s interest rate differentials.
Friday’s U.S. economic reports were mixed for Fed policy and the dollar. The University of Michigan’s Sep U.S. consumer sentiment index rose +1.3 to 59.5, weaker than expectations of 60.0. However, the University of Michigan's 5-10 year inflation forecast unexpectedly dropped to a 14-month low of 2.8%, lower than expectations of no change at 2.9%.
EUR/USD (^EURUSD) on Friday rose by +0.05%. The euro Friday moved slightly higher and garnered support from hawkish comments from ECB President Lagarde and ECB Vice President Guindos, who both expressed support for additional ECB rate hikes.
Friday’s Eurozone economic news was bullish for EUR/USD after Eurozone Aug new car registrations rose +4.4% y/y, the first increase in 14 months.
ECB President Lagarde said, "the ECB must focus on our price-stability target, which we've set at 2% over the medium-term, so we have to use all the monetary policy tools available to us to reach this target."
ECB Vice President Guindos said, "the slowdown of the economy is not going to take care of inflation on its own, so more ECB rate hikes might come in the next few months."
USD/JPY (^USDJPY) on Friday fell by -0.43%. The yen rose moderately Friday and found support on a decline in T-note yields. Also, a -1.1% decline in Japan’s Nikkei Stock Index Friday to a 1-week low prompted some safe-haven demand for the yen. In addition, the yen has support on signs the BOJ may soon intervene in the currency market to support the yen after its recent plunge to a 24-year low against the dollar. The BOJ Wednesday conducted a rate check in currency markets, a possible precursor for currency intervention.
October gold (GCV22) Friday closed up +6.00 (+0.36%), and December silver (SIZ22) closed up +0.112 (+0.58%). Gold and silver Friday recovered from early losses and posted modest gains. Gold prices rebounded from a 2-1/2 year low Friday and moved higher after T-note yields declined. Friday’s stock selloff has also boosted some safe-haven demand for precious metals and gold prices. Metals prices Friday morning initially moved lower as a rally in the dollar index to a 1-week high pressured metals prices.
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