The dollar index (DXY00) on Friday rose by +0.05% on support from higher T-note yields. Also, mostly lower stocks Friday boosted liquidity demand for the dollar. Meanwhile, the Chinese yuan Friday rallied to a 2-3/4 month high against the dollar.
Friday’s U.S. economic news was hawkish for Fed policy and bullish for the dollar. Nov PPI final demand rose +0.3% m/m and +7.4% y/y, above expectations of +0.2% m/m and +7.2% y/y. Also, Nov PI ex-food & energy rose +0.4% m/m and +6.2% y/y, above expectations of +0.2% m/m and +5.9% y/y. In addition, the University of Michigan U.S. Dec consumer sentiment index rose +2.3 to 59.1, stronger than expectations of 57.0.
EUR/USD (^EURUSD) on Friday fell by -0.16%. Dollar strength Friday weighed on the euro. The euro was also under pressure from the outlook for the ECB to ease its pace of rate hikes to +50 bp next Thursday from a +75 bp rate hike in October.
USD/JPY (^USDJPY) on Friday fell by -0.12%. The yen on Friday pushed higher on speculation the BOJ may be looking to adjust its monetary policy. Takehiko Makao, a contender to replace BOJ Governor Kuroda, said the BOJ should review its policy with gradual adjustments once the new leadership team is formed next spring. Gains in the yen were limited by higher T-note yields.
February gold (GCG3) on Friday closed up +9.20 (+0.51%), and March silver (SIH23) closed up +0.471 (+2.03%). Precious metals Friday posted moderate gains, with silver climbing to a 7-1/2 month high. Gold prices Friday found support on increased demand as an inflation hedge after U.S. Nov producer prices rose more than expected. Silver prices also rose Friday on hopes that Chinese demand for industrial metals will improve as the government eases Covid restrictions and allows the economy to reopen. However, higher global government bond yields Friday were negative for gold prices. Also, gold continues to be undercut by fund liquidation as long positions in gold ETFs dropped to a new 2-1/2 year low Monday.
More Precious Metal News from Barchart
- Stocks Edge Lower as Bond Yields Rise on Strength in U.S. PPI
- Dollar Falls as Stocks Rally
- Stocks Climb on Signs the U.S. Labor Market May be Cooling
- Dollar Undercut by Lower T-note Yields
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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