The dollar index (DXY00) on Thursday fell by -0.55%.  The dollar Thursday retreated on lower T-note yields. Also, a sharp rally in stocks Thursday curbed liquidity demand for the dollar. In addition, strength in the yen weighed on the dollar as Japanese exporters and institutional investors were repatriating the yen back home ahead of the new year.
Thursday’s U.S. economic news was mixed for the dollar. Weekly initial unemployment claims rose +9,000 to 225,000, right on expectations. However, weekly continuing claims rose +41,000 to a 10-1/2 month high of 1.71 million, showing a weaker labor market than expectations of 1.69 million.
EUR/USD (^EURUSD) on Thursday rose by +0.55%. The euro Thursday rallied to a 2-week high as a weaker dollar sparked short covering in the euro. Also, Thursday’s news that showed a slower-than-expected pace in the Eurozone money supply was supportive of the euro.
Eurozone Nov M3 money supply rose +4.8% y/y, below expectations of +5.0% y/y and the slowest pace of increase in 3-1/2 years.
USD/JPY (^USDJPY) on Thursday fell by -1.09%.  The yen Thursday moved higher as T-note yields declined. Also, speculation that the BOJ will end its negative-rate policy and raise interest rates next year has fueled short covering in the yen. The yen rose against the dollar Thursday despite the BOJ announcing additional bond purchases. The BOJ has now purchased about 16 trillion yen of government bonds in December, close to a record reached in June.
The BOJ boosted QE Thursday after it offered to buy unlimited amounts of two- and five-year notes at a fixed yield, along with 600 billion yen ($4.5 billion) of 1 to 10-year bonds.Â
February gold (GCG3) on Thursday closed up +10.20 (+0.56%), and March silver (SIH23) closed up +0.410 (+1.72%). Precious metals Thursday closed moderately higher.  A weaker dollar Thursday was bullish for metals prices. Also, lower T-note yields Thursday were bullish for precious metals. In addition, gold garnered support on increased demand as a store of value after the BOJ Thursday boosted QE and announced additional bond purchases.
More Forex News from Barchart
- The Brazilian Real and Commodities
- Strength in Tech Stocks Leads the Overall Market Higher
- Dollar Slips as the Yuan Rallies on China Reopening Optimism
- Higher Bond Yields Weigh on Tech Stocks
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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