The dollar index (DXY00) on Tuesday fell by -1.08%. The dollar Tuesday tumbled to a 6-month low as T-note yields plunged on the weaker-than-expected U.S. CPI report. The dollar was also under pressure as the slowdown in price pressures has bolstered speculation the Fed will dial back its rate-hike regime.
Tuesday’s U.S. consumer prices news for November was dovish for Fed policy and bearish for the dollar.  The U.S. Nov CPI rose +0.1% m/m and +7.1% y/y, less than expectations of +0.3% m/m and +7.4% y/y. The +7.1% y/y gain was the smallest increase in 11 months and was well below the 40-year high of +9.1% posted earlier this year in June.
Meanwhile, the Nov CPI ex-food & energy rose 0.2% m/m and +6.0% y/y, slightly less than expectations of +0.3% m/m and +6.1% y/y. The Nov core CPI increase of +6.0% y/y was a 4-month low and was 0.6 points below September’s 40-year high of 6.6% y/y.
EUR/USD (^EURUSD) on Tuesday rose by +0.85%. The euro Tuesday jumped to a 6-month high after the dollar sank on the weaker-than-expected U.S. CPI report. EUR/USD also garnered support Tuesday after the German Dec ZEW survey expectations of economic growth index was stronger than expected.
The German Dec ZEW survey expectations of economic growth index rose +13.4 to a 10-month high of -23.3, stronger than expectations of -26.4.
USD/JPY (^USDJPY) on Tuesday fell by -1.53%. The yen Tuesday rallied to a 1-week high against the dollar after T-note yields plunged on a weaker-than-expected U.S. CPI report. The yen is also climbing on speculation that the softer-than-expected U.S. CPI report will allow the Fed to dial back its rate-hike regime.
February gold (GCG3) on Tuesday closed up +33.20 (+1.85%), and March silver (SIH23) closed up +0.587 (+2.51%). Precious metals Tuesday rallied sharply, with gold jumping to a 4-month high and silver soaring to a 7-3/4 month high. A plunge in the dollar index Tuesday to a 6-month low was bullish for metals prices. Also, metals rallied after the slower-than-expected increase in Tuesday’s U.S. CPI report bolstered speculation the Fed will slow its rate-hike regime. In addition, a decline in global government bond yields Tuesday supported gold prices. However, 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 Precious Metal News from Barchart
- Stocks HIgher on Fed-Friendly U.S. CPI Report
- Dollar Climbs on Higher T-Note Yields
- Stocks Receive a Boost from M&A Activity
- Dollar Finds Support on Higher Bond 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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