The dollar index (DXY00) on Tuesday fell by -0.59% on a decline in T-note yields. Also, there was reduced liquidity demand for the dollar due to the strength in stocks and a modest recovery in cryptocurrencies. Finally, Tuesday’s U.S. economic news was slightly bearish for the dollar after the Nov Richmond Fed manufacturing survey rose +1 to -9, slightly weaker than expectations of -8.
Tuesday’s comments from Cleveland Fed President Mester were slightly hawkish and bullish for the dollar when she said that "labor demand is still outpacing labor supply," although there is no evidence of a wage-price spiral that could fuel higher inflation on the scale of the 1970s.
EUR/USD (^EURUSD) on Tuesday rose by +0.51%. The euro garnered support from Tuesday’s economic news that showed Eurozone Nov consumer confidence rose more than expected to a 5-month high. Also, hawkish ECB comments Tuesday pushed EUR/USD higher when ECB Governing Council member and Bundesbank President Nagel said the ECB would deliver another "robust" interest-rate increase in December and ECB Governing Council member Holzmann said he would support a 75 bp rate hike by the ECB at next month's meeting.
The Eurozone Nov consumer confidence indicator rose +3.6 to a 5-month high of -23.9, stronger than expectations of -26.0.
ECB Governing Council member Holzmann said he would support a 75 bp rate hike by the ECB at next month's meeting based on current economic data.
ECB Governing Council member and Bundesbank President Nagel said the ECB will deliver another "robust" interest-rate increase in December and begin quantitative tightening (QT) in early 2023.
USD/JPY (^USDJPY) on Tuesday fell -0.66%. Lower T-note yields Tuesday sparked short covering in the yen. The yen also has support from recent Fed comments that solidified expectations for smaller Fed rate hikes.
December gold (GCZ2) on Tuesday closed up +0.30 (+0.02%), and December silver (SIZ22) closed up +0.177 (+0.85%). Precious metals Tuesday posted moderate gains. A weaker dollar Tuesday was bullish for metals prices. Gold also rose Tuesday on lower global government bond yields. Gold prices continue to be undercut by fund liquidation as long positions in gold ETF’s dropped to a new 2-1/2 year low last Friday.
More Precious Metal News from Barchart
- Stocks Higher on Corporate Earnings and Lower Bond Yields
- Dollar Gains on Higher T-note Yields and Safe-Haven
- Stocks Lower on Chinese Covid Concerns
- Dollar Gains on Higher T-note Yields
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