The dollar index (DXY00) on Friday rose by +0.14%. The dollar Friday recovered from early losses and posted moderate gains. Weakness in stocks Friday boosted the liquidity demand for the dollar. Also, comments from New York Fed President Williams and San Francisco Fed President Daly boosted the dollar when they signaled that they favor higher interest rates. The dollar Friday initially moved lower after economic news from S&P Global showed U.S. manufacturing activity contracted more than expected.
San Francisco Fed President Daly said, "we are far away from our price stability goal," and she pushed back against markets' "optimistic" inflation views when she said that holding interest rates at their peak level for 11 months is a "reasonable starting point."
New York Fed President Williams said that while inflation has shown some signs of slowing, a tight labor market and other factors are likely to keep price pressures elevated and warrant high-interest rates for some time.
The U.S. Dec S&P Global manufacturing PMI unexpectedly fell -1.5 to 46.2, weaker than expectations of an increase to 47.8 and the steepest pace of contraction in 2 years.
EUR/USD (^EURUSD) on Friday fell by -0.24%. The euro Friday gave up early gains and moved moderately lower due to a stronger dollar. EUR/USD Friday initially moved higher on comments from ECB Governing Council members Muller and Rehn, who both advocated for higher ECB interest rates. EUR/USD also found support on Friday’s economic news that showed the Eurozone Dec S&P Global manufacturing PMI rose more than expected.Â
ECB Governing Council member Muller said interest rates would likely rise above levels anticipated by markets as the economic slowdown isn't enough to curb inflation as needed.
ECB Governing Council member Rehn said interest rates in the Eurozone "will still have to rise significantly" to bring inflation down to the ECB's target, and the ECB is likely to raise rates by 50 bp at the Feb and March meetings.
The Eurozone Dec S&P Global manufacturing PMI rose +0.7 to 47.8, stronger than expectations of no change at 47.1. Also, the Eurozone Dec S&P Global composite PMI rose +1.0 to 48.8, stronger than expectations of +0.1 to 47.9.
USD/JPY (^USDJPY) on Friday fell by -0.93%. The yen Friday moved higher as a slump in global equity markets sparked some safe-haven buying of the yen. The yen also has carry-over support from Wednesday’s Bloomberg report that said the BOJ sees the possibility of having a policy review next year. Higher T-note yields and weak Japanese manufacturing news Friday limited gains in the yen.Â
The Japan Dec Jibun Bank manufacturing PMI fell -0.2 to 48.8, the steepest pace of contraction in more than 2 years.
February gold (GCG3) on Friday closed up +12.4 (+0.69%), and March silver (SIH23) closed up +0.023 (+0.10%). Precious metals Friday posted moderate gains. Friday’s slump in the S&P 500 to a 5-week low boosted the safe-haven demand for precious metals. However, higher global bond yields Friday limited gains in gold. Also, hawkish Fed and ECB comments on Friday signaled higher interest rates in the future, which is bearish for metals prices.Â
More Precious Metal News from Barchart
- Stocks Fall as Central Banks Remain Hawkish
- Dollar Rallies on Safe-Haven as Stocks Plunge
- Stocks Plunge as Fed and ECB Signal Higher Interest Rates
- Dollar Weakens as FOMC Slows Pace of Rate Hikes
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.
/Oracle%20Corp_%20office%20logo-by%20Mesut%20Dogan%20via%20iStock.jpg)
/Tesla%20Inc%20tesla%20by-%20Iv-olga%20via%20Shutterstock.jpg)
/Microsoft%20sign%20at%20the%20headquarters%20by%20VDB%20Photos%20via%20Shutterstock.jpg)
