The dollar index (DXY00) on Monday rose by +0.32%. The dollar Monday recovered from early losses and posted moderate gains on a jump in the 10-year T-note yield to a 1-week high. The dollar also had support on expectations for the FOMC to raise the interest rate by +50 bp on Wednesday and to stick to its guns on further rate hikes in the coming months.
EUR/USD (^EURUSD) on Monday fell by -0.14%. A stronger dollar Monday weighed on the euro.  However, the euro had support from expectations for the ECB to raise interest rates by +50 bp on Thursday. Also, a decline in European nat-gas prices Monday to a 1-week low eased energy crisis concerns in the Eurozone and is supportive of the euro.Â
USD/JPY (^USDJPY) on Monday rose by +0.86%. Central bank divergence weighed on the yen, with the Fed, BOE, and ECB expected to raise interest rates by +50 bp this week while the BOJ maintains QE and record low-interest rates. Losses in the yen accelerated Monday after T-note yields jumped.
Monday’s economic news was mixed for the yen. On the negative side, Japan Nov machine tool orders fell -7.8% y/y, the biggest decline in more than 2 years. Conversely, Japan's Nov PPI eased to 9.3% from 9.4% in Oct. However, it was above expectations of 8.8% y/y, which was hawkish for BOJ policy.
February gold (GCG3) on Monday closed down -18.40 (-1.02%), and March silver (SIH23) closed down -0.314 (-1.32%). Precious metals Monday closed moderately lower.  A stronger dollar Monday weighed on metals prices. Also, expectations for tighter monetary policies from global central banks this week undercut metals, with the Fed, BOE, and ECB expected to raise interest rates by +50 bp this week. In addition, gold continues to be undercut by fund liquidation as long positions in gold ETFs dropped to a new 2-1/2 year low last Friday.
More Forex News from Barchart
- Stocks Receive a Boost from M&A Activity
- Dollar Finds Support on Higher Bond Yields
- Stocks Edge Lower as Bond Yields Rise on Strength in U.S. PPI
- Dollar Falls as Stocks Rally
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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